Amol Rao, research analyst, Anand Rathi expects capital goods major Larsen and Toubro to deliver revenues to the tune of Rs 18000 crore for Q3.
Also read: L&T Q3 PAT may grow 0.7%, margin guidance key: PollBelow is the edited transcript of the interview.
Q: What chances are you giving to Larsen and Toubro (L&T) throwing up some nasty shock like it did last quarter when the stock took a severe beating after the numbers, what are the prospects of a bad news this quarter?
A: Bad news is never ruled out, there is always the black swan chance that something could materialize but I don't attach too much probability to that. I definitely see that execution would be fairly in line with expectations so around Rs 18000 crore thereabouts would be what one should expect on a standalone basis from the company.
If it is significantly below that yes there is a possibility that the company would revise its guidance for revenue downwards and that is a matter of concern.
Q: Do you expect them to hold on to their revenue guidance but since you do expect them to perhaps revise it downwards what about order book?
A: Order book right now should be in the range of around Rs 160,000 crore depending on how much they execute this quarter but I don\\'t see a downward revision of 5-7 percent is something untoward because it is definitely not the Holy Grail. Rs 1 lakh crore is not the Holy Grail of order booking. So we should give them that leeway, 5-7 percent is always a slip miss chance.
Q: You don't think the stock will be punished if the order book was a little lower than that?
A: I think if it comes in below Rs 16000-18000 crore there is a very strong chance that the stock would see the jitters from investors and there could be some selling pressure.
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