L&T Q1 PAT likely to grow 11% YoY at Rs 827 cr

Revenues of the company are seen going up by 15.5% to Rs 10,951 crore during the same period, according to CNBC-TV18 estimates.

EBITDA too is likely to increase by 12.2% YoY to Rs 1,263 crore in the April-June quarter of FY13, but operating profit margin is seen declining by 40 basis points YoY and 230 basis points QoQ at 11.5% in the quarter.

On quarter-on-quarter basis, revenues are expected to fall by 41%, profit after tax by 57% and EBITDA by 51%.

While revenues are expected to be healthy, company may face marginal pressure on its operating margins. Revenue growth will be driven by execution of existing large order backlog.

Analysts feel L&T’s margin pressure situation should ease up as commodity prices reported a softening trend in Q1FY13. Despite this, company may not see aggressive margin expansion in the near term due to heightened competitive activity

Company’s order book stands at around Rs 1,45,000 crore.

Order Inflow

Analysts feel oder inflow growth is expected to be strong in Q1FY13 as finalization of some orders got deferred from FY12

They are expecting L&T to report order inflows of around Rs 18,500 crore - Rs 19,000 crore for the first quarter of FY13, which is around 23% of FY13 order inflow guidance.

Company announced orders of around Rs 14,500 - Rs 15,000 crore in Q1FY13, including 80% from infrastructure segment.

Traditionally, L&T discloses only 65% order during a quarter, but this time street is expecting the company could have already disclosed orders worth around 80%.

Consequently, L&T is likely to report order inflow growth of around 12-14% for Q1FY13. Order inflows during the first quarter of previous financial year 2011-12 stood at Rs 16,200 crore.

Key things to watch out for

Growth in order intake, particularly in overseas market

E&C margins, as 1/3rd of the order book is on fixed price contract

Order inflow guidance + management commentary on order inflow outlook

Any change to order inflow guidance for FY13

Sustainable operating margins

Risk to order execution

Management guidance for FY13E

The management had guided for 15-20% top line and order inflow growth for financial year 2012-13. They had also guided for margin shrinkage of around 50 basis points in the current financial year. In the FY12, margin was at 11.6%.