Larsen & Toubro (L&T) posted a 44.6% rise in consolidated net profit at ₹3,223 crore for the quarter that ended September 30, beating estimates, aided by improved execution and accelerated progress in its projects and manufacturing portfolio.
Separately, the company is setting up a subsidiary for semiconductor chip design, with an investment of up to ₹830 crore. The engineering and infrastructure conglomerate had posted a net profit of ₹2,229 crore for the same period of the previous fiscal.
During the reporting quarter, L&T’s consolidated revenue rose 19.3% to ₹51,024 crore from ₹42,763 crore recorded during the same period a year ago. The company’s Ebitda rose %15.1 to ₹5,632 crore from year-ago quarter, L&T said in a statement.
A consensus estimate of Bloomberg analysts was expecting the firm to post a net profit of ₹2,725 crore. The company’s revenues and Ebitda were also ahead of street estimates of ₹50,670 crore and ₹5,450 crore, respectively.
“The company’s order book rose 22% on a year-on-year basis to ₹4.51 trillion as of September 30, posting the highest-ever order book for the company. Of this, 35% was from international markets. The order wins have been in the area of both hydrocarbons and infrastructure,” R Shankar Raman, chief financial officer, L&T, said in a post-earnings call.
“The company now tops the list of international engineering, procurement and construction (EPC) contractors working in the Middle East and North Africa (MENA) region in terms of value for projects under execution,” S N Subrahmanyan, chairman and managing director said in a release. He also added L&T demonstrated “strong” operating and financial performance in the quarter with all business segments – projects, manufacturing and services – recording growth.
During the quarter, the company completed its first-ever buyback of shares. In July, L&T announced plans to buy back shares worth Rs 10,000 crore, the first time since it got listed in 1950.
L&T’s infrastructure projects segment secured order inflow of ₹27,990 crore, a 12% YoY growth, with global orders constituting 24% at ₹6,775 crore. The energy projects segment secured orders worth ₹40,141 crore, with the order book crossing ₹1 trillion.
L&T is also setting up a wholly-owned subsidiary for semiconductor chip design and product ownership with an investment of up to ₹830 crore. Further details were not immediately disclosed, with the firm stating to intimate additional details in due course.
Raman further added that the company was not targeting chip manufacturing and would stick to design only.
Its hi-tech manufacturing segment secured orders valued at ₹2,395 crore, a 35% rise, while IT & Technology Services segment recorded a 7% growth with customer revenues of ₹11,182 crore.
Outlook
“In the near term, we remain cautiously optimistic, considering the recent geopolitical developments. However, we do expect sustained buoyancy of services and the Indian government’s thrust on capex to continue,” Subrahmanyan added.
Talking of the war in the Middle East, Raman said: “We are not seeing any adverse impact on execution or order book. But are keeping our ears close to the ground.” In India business is on course and the order inflows are expected to continue, he added.
Headwinds from the global economic slowdown and declining global trade continue to pose event risks. Further, volatile energy and food prices in the wake of lingering geopolitical tensions and adverse weather conditions render uncertainty to the inflation outlook, the statement added.