1. Larsen & Toubro Q4 profit pulls positive surprise, but outlook cautious

Larsen & Toubro Q4 profit pulls positive surprise, but outlook cautious

Larsen & Toubro on Monday reported a good set of numbers for the three months to March with a consolidated net profit of Rs 3,020 crore, up 30% year-on-year, beating the Street’s estimates.

By: | Published: May 30, 2017 8:15 AM
Larsen & Toubro Q4 profit, Larsen & Toubro, L&T, Street’s estimates, Ebitda, BHEL, R Shankar Raman, capital goods sector Consolidated net, domestic order inflows up an impressive 30% but company cautious in outlook. (Image: Reuters)

Larsen & Toubro on Monday reported a good set of numbers for the three months to March with a consolidated net profit of Rs 3,020 crore, up 30% year-on-year, beating the Street’s estimates. The engineering major reported an increase in revenues of 12% y-o-y at Rs 36,830 crore. However, Ebitda fell 3.6% on an annualised basis to Rs 4,340 crore with the operating margin coming in at 11.8%. The highlight of the quarter was a smart 30% year-on-year jump in domestic order inflows; total inflows were up 10% y-o-y.

In contrast, state-owned BHEL reported a sharp fall in net profit of over 57% y-o-y to Rs 215.55 crore. Revenues came in at Rs 10,303 crore, down 5% y-o-y. The commentary from L&T for 2017-18 was cautious, with the management not expecting a recovery in private sector investment in 2017-18. Nevertheless, the order inflow guidance at 12-14% and revenue guidance of 12% for the current year were both encouraging.

L&T bagged orders worth Rs 1.43 lakh crore in FY17, a 5% increase over the previous year. The order book at the end of March 2017 of Rs 2.61 lakh crore marked an increase of 5% over that in FY16. R Shankar Raman, director and chief financial officer (CFO), L&T, noted at a media conference that the lion’s share of orders was from infrastructure projects.

He added that there had been a slowdown in international orders, especially from West Asia, following the fall in crude oil prices. “We have also been selective in choosing orders,” the CFO said, adding that the power sector had not made much of a contribution to the order book. He hoped the 30% rise in Q4 domestic orders would be the beginning of an investment cycle enabling the company to utilise capacity.

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The company has removed orders worth Rs 18,000 crore, which are ‘non-moving’ and the backlog comprises only those that can be executed. L&T ended 2016-17 with consolidated revenues of Rs 1.10 lakh crore, up 8%, while net profit rose 43% to Rs 6,040 crore. Operating profit rose 6% to Rs 11,070 crore.

Group executive chairman AM Naik said the capital goods sector has faced challenging times though there were opportunities. Naik observed the firm had missed guidance because projects were getting delayed. “The real estate market fared badly and we had to stop some projects,” Naik said, adding that some defence orders too had been delayed.

  1. S
    Suryanarayana Chunduru
    Jun 3, 2017 at 11:02 am
    CONGRATS to the Management of the L&T for achieving this Positive Surplus in Q4, that to even at the Demonetization period time. Keep it up.
    Reply

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