L&T Q1 Results: Net profit spikes 46.5% to Rs 2,493 crore, beats estimates

L&T's infrastructure projects segment has seen a sequential fall in operating margins for the last five quarters.

Engineering and construction major Larsen and Toubro (L&T) on July 25 reported a consolidated net profit for the quarter ended June 2023 at Rs 2,493 crore, up 46.5 percent compared to Rs 1,702.07 crore in the same quarter last year.

Its revenue from operations for the quarter stood at Rs 47,882 crore, registering a growth of 33.6 percent from Rs 35,853 crore a year ago, the company said in an exchange filing.

The share of international revenues during the quarter was 40 percent.

As per a Moneycontrol poll, L&T's consolidated revenue for the June quarter is expected to rise 14 percent YoY to Rs 40,813 crore. Meanwhile, its net profit is likely to grow 24 percent on-year to Rs 2,110 crore, as per an average of four brokerage firms by Moneycontrol.

The Board of Directors has recommended a special dividend of Rs 6 per equity share for the approval of shareholders.

The company's board has also approved a share buyback of Rs 10,000 crore.

The company said the order inflow for the quarter ended June 30, 2023 stood at Rs 65,520 crore, registering a growth of 57 percent over the corresponding quarter of the previous year.

International orders were at Rs 27,646 crore which constituted 42 percent of the total.

Segment-wise, L&T’s infrastructure projects segment secured order inflows of Rs 40,051 crore, during the quarter ended June 30, 2023, doubling when compared to the corresponding quarter of the previous year with various orders secured across sub-segments.

The consolidated order book of the group stood at Rs 4,12,648 crore as on June 30, 2023, with international orders having a share of 29 percent, L&T said.

The order book of Rs 4,12,648 crore represents a growth of 13.5 percent over Rs 3,63,448 crore as on June 30, 2022.

Its operating margin for the first quarter of FY2023-24 came in at 10.2 percent, compared to 11.04 percent in the year-ago quarter and 11.68 percent in the March quarter.

Analysts had expected L&T's operating margin to come in at 11.3 percent in the June quarter, implying a 29 bps expansion on a YoY basis and a contraction of 38 basis points on a QoQ basis.

OUTLOOK

Going forward, L&T expects growth momentum in the Indian market to continue on the back of a stable rabi crop production, expected normal monsoon, continued buoyancy in services and stable inflation with a softening bias.

L&T added that given the healthy balance sheets of banks and corporates and declining uncertainty, conditions are favourable for the capex cycle to sustain the momentum.

"Higher government capex allocation in the green economy, including clean and renewable energy will provide the necessary impetus to investments in energy transition and larger infrastructure projects," the company said in a press release.

The infra-major added that it will continue its planned trajectory of profitable and return accretive growth.

"Focus will remain on cash generation and judicious capital allocation. L&T has a robust order prospects pipeline in the medium term and is confident of sustaining its growth momentum by utilising the emerging opportunities, with an overarching aim of improving shareholder value on a sustainable basis," the company said.

The construction giant also said that, on the global front, global economies are "turning around the corner."

"Major oil-producing nations continue to invest on oil & gas, industrialization and energy transition initiatives, that will augur well for L&T’s projects business," the company said.

The company added that with China's economy opening up and falling energy prices and easing inflation around the world, global economies are expected to see a boost in growth.