Analysts expect strong numbers from L&T in Q2
Engineering and construction major Larsen & Toubro (L&T) is set to declare its second quarter numbers of financial year 2012-13 today. Analysts expect relatively stronger set of results from the L&T among other companies. Profit after tax is likely to grow by 11.8 percent year-on-year to Rs 893 crore for the quarter.
October 22, 2012 / 12:49 IST
Engineering and construction major Larsen & Toubro (L&T) is set to declare its second quarter numbers of financial year 2012-13 today. Analysts expect relatively stronger set of results from the L&T among other companies. Profit after tax is likely to grow by 11.8 percent year-on-year to Rs 893 crore for the quarter.
Revenues are seen going up by 16 percent to Rs 13,045 crore from Rs 11,245 crore during the same period, driven mainly by strong order execution.Earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to go up by 15.6 percent YoY to Rs 1,358 crore in the quarter ended September 2012.Operating profit margin is expected to be flat at 10.4 percent for the quarter compared to a year ago quarter.Rupee appreciation will also support the results leading to forex gains (of around Rs 50 - 70 crore) as against exchange loss witnessed last quarter.On the order book / order inflowsAnalysts expect 10-15 percent growth in company's order inflow that is likely to be over Rs 16,000 crore for the quarter. Company has already announced inflow of Rs 15,800 crore orders in the second quarter, which is 19% of the FY13 guidance.Analysts feel the announcement of Rs 20,000 crore worth of orders will give a quick upside around the result time. Larger chunk of inflows is focused on the buildings and the T&D segments.While inflows have been strong for transmission and distribution (T&D) space, slowdown in key order generating sectors such as power, metal and hydrocarbons is expected to start showing negatively in the order inflow cycle.Sectoral trendsAnalysts feel the sectoral issues continue to plague the sector, which are fuel availability, clearances and aggressive bidding for the few projects that come by.Some analysts fear that with valuations having expanded ahead of a visible turn in the capex cycle, risk to the downside is increasing.Slowdown in company’s key markets and slowing order inflow from overseas markets are expected to result in slowdown in the current momentumInvestors should watch out for:
-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 marginsManagement guidance for FY13EThe management had projected a 15-20 percent growth in top line and order inflow, which implies order inflows of Rs 81,160 crore to Rs 84,689 croreThey had also guided for margin shrinkage of around 50 basis points in full year. FY12 margin stood at 11.6 percent.The stock is trading close to its 52-week high of Rs 1,663 touched October 12, 2012. It has rallied 16 percent in the last three months and one year. On Friday, it fell 1.18 percent to close at Rs 1,632.70. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
