L&T Q3 preview: Profit may see double-digit decline, but core EPC could drive revenue growth
Narnolia Financial Services expects order inflow of around Rs 62,000 crore for Q3FY21 mainly driven by Infrastructure.
January 25, 2021 / 11:12 AM IST
Engineering and infrastructure major Larsen & Toubro is likely to report a double-digit decline in profit for the quarter ended December 2020 due to higher depreciation and interest cost, but order inflow is expected to remain strong. The company will announce its quarterly earnings on January 25.
The revenue growth is expected to be driven by core EPC business. "We expect 2 percent YoY improvement in core EPC revenues in Q3 FY21 for continuing operations on improvement in execution across projects, and 4 percent growth in total revenue from operations," said Kotak Institutional Equities.
"Order inflow has remained very strong for the company in nine months ended December 2020 and we expect these projects to start contributing from FY2022 onwards to revenues," the brokerage added.
Narnolia Financial Services, which sees a 28 percent decline in profit and 4 percent growth in revenue YoY, expects order inflow of around Rs 62,000 crore for Q3 FY21 mainly driven by Infrastructure.
L&T has received Rs 25,000 crore worth of order for the Mumbai Ahmedabad bullet train projects. Other business like Hydrocarbon and MMH also witnessed good order inflow.
"Recent hike in commodity prices is not expected to impact the current order book significantly as it is sufficiently hedged with variable pricing contracts," said Kotak.
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Motilal Oswal feels key things to watch out for would be a ramp-up in execution trend and return of migrant labourers to project sites, the outlook for Q4 FY21 and commentary on working capital management.