Larsen and Toubro, has in fact, tempered its revenue guidance for the current year.
That the recovery in corporate India could be some time away is evident from the anaemic top line growth of sub-5% seen in the September quarter; if net profits are up a more robust 13.5% year-on-year, it’s primarily thanks to companies having reined in expenditure, the lower prices of commodities and a handsome contribution from other income.
Also, interest costs have been flat, clearly the consequence of little capacity creation and companies scaling back production in the absence of demand. Those companies that are better-rated have been able to borrow in the commercial paper market at lower rates. The sluggish loan growth, running at 11-12%, even in the midst of the busy season confirms corporates are in no rush to start new projects.
There are few signs of any sustained pick-up in the capital goods space; while order books at engineering firms are growing, whether these will grow meaningfully is not clear yet.
Larsen and Toubro, has in fact, tempered its revenue guidance for the current year. Demand in some segments of industry seems to be getting better; domestic sales of commercial vehicles in October were down 3% y-o-y, much better than the drop of 9.14% y-o-y between April and October.