L&T net increases 16% to Rs 996 cr; order forecast halved to 5-7%

Engineering and construction firm Larsen & Toubro (L&T)'s net profit increased 16 per cent to Rs 996 crore for the September quarter from Rs 861.7 crore a year ago. The profit was also two per cent higher than Bloomberg consensus estimates of Rs 975 crore. The profits were boosted by exceptional gains of Rs 309.6 crore on account of a stake sale in a subsidiary company, as well as in an associate company.

L&T's consolidated gross revenue rose 11 per cent to Rs 23,605 crore. International revenue at Rs 7,658 crore constituted 32 per cent of the total revenue. The group's consolidated order book stood at Rs 2,44,097 crore, higher by 14 per cent year-on-year, with international order book constituting 28 per cent of the order book.

Earnings before interest, tax, depreciation, and amortisation (Ebitda) rose 11 per cent to Rs 2,590 crore, but was lower than Bloomberg consensus estimates of Rs 2,692 crore. With profitability coming lower than estimates, the L&T stock closed at Rs 1,411 a share on the BSE, down 4.11 per cent from the previous close. During the day, the stock had fallen to its 52-week look of Rs 1,400 on the BSE.

Total expenses rose to Rs 21,495 crore during the quarter, from Rs 19,373.6 crore a year ago. The firm secured fresh orders worth Rs 28,620 crore. The global order inflow was Rs 10,973 crore, which constituted 38 per cent of the total order inflow. Major orders during the quarter were secured by the infrastructure segment. The order inflow, however, was 28 per cent lower than inflows a year ago. With soft order inflows in the first half, the company has cut its order inflow forecast from 15 per cent to five-seven per cent for 2015-16. Motilal Oswal Securities' assistant vice-president (midcaps research), Ravi Shenoy, said, "Earnings disappointed with higher-than-expected depreciation and interest. Lower commodity prices have cut capital expenditure (capex) in related industries. This has led the firm to cut its revenue growth forecast to 12.5 per cent. Order intake at Rs 28,900 crore versus Rs 39,800 crore shows stress on capex globally."

On the non-crore asset monetisation, Shankar Raman said: "What the company is clearly engaged in is to make sure that much of our efforts are towards large scalable profitable businesses. So if there are some sub-scale or not profitable (businesses) in the portfolio, it is our responsibility to find a new home to those businesses."

In its outlook, the company said the ground level inputs indicated it might take further time for a significant pick-up in business opportunities. "Given its larger order book, the company is focusing on profitable execution and is optimistic about sustaining the performance in the near-term and also about its potential to gain from the emerging prospects as the economic environment improves."