L&T Q4 net falls 27%, execution slowdown dents revenue

On a standalone basis, its net profit slipped 24.3 percent to Rs 2060.6 against Rs 2723.5 crore (Y-o-Y) while sales was down 5.5 percent at Rs 18967.9 crore versus Rs 20079.1 crore (Y-o-Y).

The order intake for the fourth quarter was also higher at Rs 47582 crore, up 39 percent (Y-o-Y). International order inflow in Q4 was at Rs 11364 crore, which constituted 24 percent of the order inflow for the quarter.

Consolidated order book of the group stood at Rs 232649 crore as at March 31, 2015,higher by 28 percent (Y-o-Y). International order book constituted 26 percent of the totalorder book.

“Infrastructure and services businesses recorded healthy increase in the PAT, thereby limiting annual decline in overall PAT for the year at 2.8 percent. Moreover, PAT of the previous year included a one-time write back of  Rs 664 crore on account of amortisation charge of toll road projects. Neutralising this high base effect, the PAT for the year 2014-15 shows an increase,” it said.

For the whole year, net profit was at Rs 4765 crore compared to Rs 4902 crore. Its consolidated revenue was at Rs 92762 crore the full year FY15, registering an increase of 8 percent on an annual basis. International revenue, at Rs 25926 crore constituted 28 percent of the total revenue.

The board of directors has recommended dividend of Rs 16.25 per share.

Outlook

Subdued investment climate during the year 2014-15 limited opportunities for capital goods and infrastructure sector in India. Initiatives which could potentially trigger investment interest in core sectors were time consuming. The government is expected to address the policy hurdles by accelerating decision making and by enhancing the ease of doing business.

Meanwhile the global recovery has been slow. Sharp decline in oil prices and persisting geo-political uncertainties in the Middle East Region have impacted the investment momentum. Several currencies have depreciated against the USD causing changes in the competitive landscape.

Though demand in short-term remains impacted, the reform process in India is expected to gain ground in the medium term. Faster implementation of crucial projects and de-bottlenecking of stalled projects will help revive the growth momentum. The government’s focus on infrastructure development, manufacturing of defence equipment, fast tracking power and mining sector reforms and providing thrust to Make in India programe are positive indicators for the company.

Further, progress on major reforms like land acquisition and GST should significantly improve sentiment. The company is well placed to benefit early as sustainable growth opportunities emerge over the next few years.