Infrastructure major Larsen & Toubro is expected to report high single-digit growth in revenue, but adjusted revenue for third quarter (October-December 2019) could be in double digit on January 22.
In actual, year-on-year numbers are not comparable as the company sold its electrical and automation business, and acquired Mindtree.
The revenue growth is likely to be supported by strong execution in infrastructure, hydrocarbon, services and defence segments, but power business continued to weakness for another quarter in Q3.
"We expect 9 percent growth in core EPC revenues in Q3FY20 for continuing operations driven by growth in Hydrocarbon segment. Infrastructure segment will report a modest around 6 percent revenue growth, similar to growth opening backlog as of Q1FY20 (up 4 percent YoY). Among other segments, power segment will see another quarter of decline based on our analysis of order book," Kotak Institutional Equities said.
Profit may grow in double digits (around 20 percent) due to lower tax cost YoY, but margin may remain under pressure on sequential as well as YoY.
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Most brokerages expect the company to revise downwards its full year order inflow guidance due to slow economic activity. Hence, the order inflow remains a key monitorable.
"L&T’s order inflow guidance could be cut given that merely around Rs 5,000 crore worth of orders were announced in Q3 (H2FY20 order inflow ask of Rs 85,000 crore to meet management guidance)," Edelweiss said.
Key things to watch out for would be execution trend and outlook on some big ticket orders, commentary on private capex cycle and status of the coastal road project in Mumbai, among others.
The stock fell 12 percent during the quarter, underperforming BSE Capital Goods index (down 9 percent).
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