Larsen & Toubro (L&T) on Monday reported a 22.5% year-on-year increase in consolidated net profit for the three months to September at Rs 2,229 crore. The profits were in line with Bloomberg estimates of Rs 2,240 crore and were driven up by better execution compared with the pandemic-hit quarter a year ago.

Revenues were up 23% y-o-y to Rs 42,763 crore, beating estimates of Rs 39,150 crore. The engineering heavyweight’s operating profit margins for Q2FY23 were stable at 11.46%. Ahead of the results the L&T stock closed at Rs 2,023.95, up 2.5% over Friday’s close.

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Order inflows during the quarter were robust, up 23% y-o-y to Rs 51,914 crore with orders from the domestic market accounting for two-thirds. The consolidated order book stood at Rs 3.72 trillion as on September 30, up 13% y-o-y, with international orders having a share of 28%.

R Shankar Raman, wholetime director and CFO, L&T, said the order inflow guidance for FY23 of an increase of 12-15% was expected to be met. “At the midway mark, we believe we will meet the guidance with the bias towards the upper levels of the band,” he said.

The pick-up in domestic orders augured well for the company, Shankar Raman said, adding that the pipeline of prospects from the oversea markets like the UAE and Saudi Arabia continue to be encouraging.

L&T is hoping to sign an enabling agreement to divest its roads portfolio in the next couple of quarters and the company is awaiting regulatory approvals. The divestment of the Hyderabad metro, Shankar Raman said, would be carried out in a phased manner with the capital structure being reorganised first to bring down the debt to Rs 7,000 crore from Rs 13,000 crore at present. “The ridership of the Hyderabad metro is improving and has gone up to 430,000 passengers per day. Moreover, we have received permission from the Telangana government to monetise land parcels. We should be able to make the asset attractive in two-three years,” Shankar Raman said.

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The company’s infrastructure business fared well during the quarter, though the Ebitda margins were soft at 6.6% vis-à-vis 8.3% in Q2FY22. The management attributed this to higher input costs on the back of stiff commodity prices in the last 12-18 months and additional costs for successful close- outs of international order. It said the outlook for business from the Middle East (West Asia) market was strong.

The infrastructure projects segment secured order inflows of Rs 25,058 crore, a growth of more than 100%.

L&T’s financial metrics showed an improvement with the debt-equity ratio coming down to 1.33 from 1.4 a year ago and the debt-service coverage ratio up at 4.88 from 2.61 in Q2FY22.