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Engineering and construction major Larsen and Toubro's (L&T) consolidated profit after tax increased 15.5 percent year-on-year to Rs 996 crore in July-September quarter, boosted by exceptional income of Rs 309.6 crore. Adjusted profit (excluding exceptional income) fell 20 percent to Rs 686 crore Y-o-Y.The company says exceptional income was related to gains on divestment of part stake in a subsidiary company and stake in an associate company.Revenue grew by 10.6 percent to Rs 23,393 crore from Rs 21,159 crore in same period.
According to analysts polled by CNBC-TV18, profit was estimated at Rs 944 crore and revenue of Rs 23,409 crore for the quarter with operating profit growth of 14 percent and margin expansion of 40 basis points.
Consolidated operating profit increased 11 percent to Rs 2,592 crore and margin expanded by 7 basis points to 11.1 percent compared to year-ago period. Operating cost increased 10 percent Y-o-Y.Numbers were more or less below estimates for the quarter but the most disappointing factor that dragged the stock was its cut in revenue as well as order inflow guidance for FY16. The stock closed at Rs 1,411.15 today, down 4.11 percent amid high volumes after hitting a 52-week low of Rs 1,400 on BSE.
Order Inflow and Guidance
While addressing press conference, L&T's Chief Financial Officer, R Shankar Raman says the company has slashed its order inflow guidance for FY16 to 5-7 percent from 15 percent earlier and revenue growth guidance to 12.5 percent from 15 percent earlier.
Lower commodity prices & weakening currency have been constraining growth prospects, he says, adding it may take further time for healthy pick-up in business opportunities.
This guidance cut has come in higher-than-expected, says Tarang Bhanushali of IIFL, adding this would lead to some earnings cut both in FY16 and FY17.
Pankaj Sharma, head-equities, Equirus Securities feels current guidance has become more realistic now, saying he hopes the company is able to meet this with a decent performance in second half (H2FY16).
L&T has secured fresh orders worth Rs 28,620 crore at group level during the quarter, down 28 percent compared to Rs 39,797 crore in corresponding period of last fiscal but it increased 8.5 percent on sequential basis.
Investment momentum in economy has not picked up leading to low order inflow during the quarter, Raman says, adding many projects in Middle East are under review due to low oil prices.
Major orders during the quarter were secured by infrastructure segment, the company said, adding international order inflow during the quarter stood at Rs 10,973 crore - constituted 38 percent of total order inflow (an increase of 62 percent over a year-ago period).
Consolidated order book of the group stood at Rs 2.44 lakh crore at the end of September 2015, higher by 14 percent compared to year-ago period with international order book constituting 28 percent of order book.
Segmental performance
Revenue from its infrastructure segment (which contributes more than 45 percent to total revenue) was at Rs 10,668 crore for the quarter, registering a year-on-year growth of 11 percent. It secured new orders worth Rs 16,682 crore under this segment.
Order book of this segment grew by 20 percent Y-o-Y and stood at Rs 1.75 lakh crore at the end of September quarter, the company says, adding segment recorded lower EBITDA margin at 8.6 percent (against 10.6 percent Y-o-Y) on account of job mix with projects at early stage.
Power business revenue increased 21 percent to Rs 1,404 crore with operating profit margin expansion 320 basis points on yearly basis at 16.1 percent. However, order inflow of this segment fell sharply to Rs 1,783 crore compared to Rs 7,714 crore in same period.
Revenue from hydrocarbon business rose 7 percent year-on-year to Rs 1,935 crore but its order inflow plunged 51 percent to Rs 1,244 crore compared to year-ago period with order book at Rs 14,722 crore at the end of quarter.
IT segment revenue increased 23 percent to Rs 2,288 crore with EBITDA margin expansion of 250 basis points at 21.1 percent compared to year-ago period.
L&T says its financial services revenue stood at Rs 1,863 crore, up 16 percent year-on-year with operating profit margin expansion of 240 basis points at 18.1 percent for the quarter.
Finance cost during the quarter climbed 20 percent to Rs 827.8 crore compared to Rs 690.51 crore in same quarter last fiscal.
Standalone earnings
Net profit grew by 7.3 percent year-on-year to Rs 1,118 crore and revenue rose by 4 percent to Rs 13,234 crore during July-September quarter. Profit was supported by exceptional gain of Rs 546 crore.
However, operating profit fell 24.6 percent to Rs 1,011 crore and margin contracted by 290 basis points to Rs 7.6 percent in same period.
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