1. L&T net up 27% but order guidance down

L&T net up 27% but order guidance down

Infrastructure and heavy engineering major Larsen and Toubro (L&T) has cut its order inflow guidance for the full year ended March 2018, and now expects to close the financial year with only a nominal increase over last year’s numbers, as the ordering environment continues to be challenging and procedural delays prolong the project award momentum.

By: | Published: November 12, 2017 5:37 AM
 Infrastructure and heavy engineering, Larsen and Toubro, Financial year, L&T Infrastructure and heavy engineering major Larsen and Toubro (L&T) has cut its order inflow guidance for the full year ended March 2018, and now expects to close the financial year with only a nominal increase over last year’s numbers, as the ordering environment continues to be challenging and procedural delays prolong the project award momentum.

Infrastructure and heavy engineering major Larsen and Toubro (L&T) has cut its order inflow guidance for the full year ended March 2018, and now expects to close the financial year with only a nominal increase over last year’s numbers, as the ordering environment continues to be challenging and procedural delays prolong the project award momentum.  The company had guided a growth of 12%-14% over last year’s order inflows in the  beginning of the year. It closed the financial year 2016-2017 with an order inflow of Rs 1.43 lakh crore. However, the company has kept its revenue growth guidance of 12% and margins improvement of 25 basis points over FY17 intact.

Speaking at an earnings press conference, R Shankar Raman, chief financial officer of L&T, said a significant number of orders where L&T was well placed were to be announced in September, but have got delayed. “Investment sentiments are still subdued — public sector continues to be the leader in terms of investment outlay, private sector is short of confidence in so far as committing investments are concerned. They are still figuring out a way to provide returns on their investments that they have made in the last cycle and until that is fully achieved, the private sector will take a while before they come back in the investment mode,” he said.

Meanwhile, the net profit for the bellwether company was up 27% y-o-y to Rs 1,820 crore, including exceptional gain of Rs 137 crore on account of divestment of a subsidiary and part of the portfolio restructuring that it undertook.  The net profit without taking the exceptional gain into account stood at Rs 1,683 crore, up 63% y-o-y. For the three months ended September 30, 2017, the company’s fresh order intake was lower by 8% year-on-year to Rs 28,732 crore, while for the six months of April-September, order inflows fell 9% to Rs 55,084 crore.  The company saw a 20% y-o-y decline in domestic orders during the quarter. However, the redeeming feature was international orders, which were up nearly 40%, largely aided by hydrocarbon orders won in UAE and Kuwait and some orders in power transmission and distribution. The order book was up 2% and stood at Rs 2.58 lakh crore as on September 30, 2017.

The net sales were up 6% y-o-y to Rs 26,447 crore led by water, heavy engineering and services business.  The EBITDA (earnings before interest, tax, depreciation and amortisation) was up  28% to Rs 2,960 crore, as the operating costs of the company were up lower in compared to the revenue growth seen during the quarter.
Consequently, the EBITDA margins were up 190 basis point to 11.2%. Going forward, Shankar Raman said the company expects that with the kind of infrastructure investments required in the country, the public sector will continue to push forward and keep investment interest alive.

 

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