Larsen & Toubro’s second quarter earnings were a mixed bag with revenues being ahead while hydrocarbon and metallurgical segments coming in as a disappointment, according to Morningstar India’s equity research analyst Piyush Jain.
L&T posted a 20.5 percent jump in standalone profit (boosted by exceptional income) and a 3.3 percent rise in revenues.
Below is the transcript of Piyush Jain's interview with Nayantara Rai and Pragya Bhardwaj on CNBC-TV18.
Pragya: The company has reported a net sales of Rs 12,717 crore, growth of about 3.3 percent YoY. EBITDA has come in at Rs 1,341 crore, which is a growth of about 13.1 percent odd. Overall margins have been held at about 10.5 percent odd. There is a big jump in the other income this time from Rs 450-500 crore usually to Rs 603 crore, which has boosted consolidated profit, which came in at Rs 1,042 crore. How do you think the numbers have fared?
A: There are two things here, one is we were not expecting another loss in the hydrocarbon segment, though it is small. We were just expecting a flat sort of numbers in hydrocarbon. In terms of our order inflow estimate, Rs 40,000 crore was somewhere there in the reports and we were working at somewhere around Rs 34,000 crore.
Pragya: The company has reported a 23 percent jump in the infrastructure revenues. What are the kind of numbers that you were looking at and one of the concerns this time was that the big ticket orders specially in the infrastructure segment, which the company had reported over the last three to four quarters they are still to reflect in the revenue growth of the company given that execution will start picking up momentum. Is that an assumption that you were working with and what were your numbers on the infrastructure bit?
A: Infrastructure numbers are more or less in line. So it is Rs 9,841 crore, we were working somewhere around Rs 10,000 crore. So, it is in line I am not disappointed with that. My disappointment is slightly more in the hydrocarbon segment. Because revenues are higher but it is a negative margin and that's a good loss on good revenue.
So that remains a drag on the group performance overall and if you look at the metallurgical performance, again, the activity remains subdued and we will have to look below the numbers where it looks like the depleted order book is not helping the segment either. So that is one of the laggard in the results, the metallurgical and the hydrocarbons.
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