Moneycontrol Bureau
Engineering and infrastructure major Larsen & Toubro's (L&T) third quarter profit increased by 19.4 percent year-on-year to Rs 1,034.8 crore, aided by other income and lower finance cost.
Revenue rose by 8.3 percent to Rs 25,829.3 crore in quarter ended December 2015 compared to Rs 23,847.9 crore in same period last year, driven by infrastructure, power and hydrocarbon segments.
While addressing press conference, R Shankar Raman, chief financial officer, L&T said the company is on course to meet its full year revenue guidance of 10-15 percent. He further said he expects order inflow to go up in Q4 but order inflow growth to remain flat in FY16, (against earlier guidance of 5-7 percent growth). In FY16 so far, its order inflow stood at Rs 93,548 crore while order inflow in FY15 was at Rs 1,55,400 crore.
Order inflow in Q3 increased by 11 percent year-on-year to Rs 38,528 crore at group level during the quarter, led majorly by infrastructure segment. It included international order inflow of Rs 11,115 crore for the quarter.
Consolidated order book of the group stood at Rs 2.56 lakh crore as of December 2015, higher by 14 percent on a YoY basis with international order book constituting 27 percent (approximately Rs 70,000 crore) of order book.
Bottomline was in line but revenue and operational performance missed expectations. According to analysts polled by CNBC-TV18, profit was expected at Rs 1,050 crore on revenue of Rs 26,470 crore with operating profit growth of 9 percent and margin contraction of 22 basis points for the quarter.
Operating profit (earnings before interest, tax, depreciation and amortisation) declined 8.2 percent year-on-year to Rs 2,649 crore and margin contracted by 180 basis points to 10.3 percent in quarter gone by.
Margin was hit by employee and sales & distribution expenses. "Employee expenses shot up 25 percent year-on-year on account of expansion in international business and sales & distribution cost was higher by 35.3 percent due to higher provisions," Shankar Raman said.
Revenue from infrastructure segment grew by 2.5 percent year-on-year to Rs 12,112.4 crore with EBIT (earnings before interest and tax) rising 0.6 percent, impacted by delayed customer clearances and tardy progress payments on certain jobs.
Power business revenue doubled to Rs 2,296 crore during the quarter with EBIT climbing 18.9 percent to Rs 181.5 crore YoY on the back of progress in coal and gas based projects under execution.
L&T said revenue from heavy engineering increased by 10.9 percent on yearly basis to Rs 948.7 crore but at EBIT level, the segment posted loss of Rs 23.8 crore against profit of Rs 41 crore in year-ago period. Revenue growth was mainly contributed by defence and aerospace business while EBIT was impacted by cost & time overruns on certain process plant and nuclear equipment jobs under execution and under recovery of fixed overheads.
Hydrocarbon business has registered a 22.7 percent YoY growth at Rs 2,183.9 crore with EBIT improving to Rs 39.3 crore from loss of Rs 137.2 crore.
On outlook, the infrastructure major said domestic economy continued to face headwinds, adding tight liquidity and weak global cues have kept the markets tentative.
It further said fall in oil & commodity prices, China slowdown and significant depreciation in emerging market currencies against US dollar have contributed to a volatile economic environment, adding industrial and private sector capex is likely to remain muted.
Other income in Q3 shot up by 90.8 percent to Rs 451.7 crore while finance cost declined 18.9 percent to Rs 744.6 crore compared to corresponding quarter of last fiscal.
The scrip of Larsen and Toubro closed at Rs 1,102.20, up Rs 25.05, or 2.33 percent ahead of earnings that announced after market hours.
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