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Larsen & Toubro (L&T) on Wednesday reported a good set of numbers for the three months to December 2013, with revenues of R14,387 crore, up 12% year-on-year (ex-hydrocarbons). Operating margins at 11.64% beat the street’s estimates, rising 186 basis points y-o-y, while earnings before interest, tax, depreciation came in at R1,675 crore, up 33% y-o-y.
The engineering major reported a profit after tax of R1,241 crore, up 22% y-o-y.
Order inflows were up a robust 21% on an annualised basis at R21,722 crore taking the company’s order book to R1.71 lakh crore, up 13% on the year.
The L&T management was hopeful of meeting its revenue guidance for the year but felt it might fall short on its order flow guidance. “There is a fighting chance of us meeting the revenue guidance of 15% for FY14 though we have to work hard to get there. But the risk is not as sharp as that for order procurement which we guided at 20%,” chief financial officer R Shankar Raman said at a press conference.
The CFO added that considering the investment climate today and that industry is waiting before committing capital, “it is our assessment we will end the year at 15% higher order flows”.
Approximately 76% of the firm’s orders during the December quarter came from the area of infrastructure. “We have grown the order book at a time when even maintaining it is a challenge,” Shankar Raman said, pointing out that uncertainty in the macro and policy environment continued and was most evident in the power, minerals and metals sectors. The international focus has paid dividends with 30% of the orders in the third quarter coming from overseas markets. The bulk of the orders has been sourced from the public sector. “The private sector remains shy of investment and there isn’t much activity in the PPP space,” Shankar Raman said, pointing out there appeared to be a slowdown in the power sector.
L&T’s third-quarter results are excluding the performance of the hydrocarbon business, which became a wholly-owned subsidiary with effect from April 1, 2013, the company said in a statement. The business has been transferred to L&T Hydrocarbon Engineering upon sanction of the scheme by the Bombay High Court through an order passed in December 2013. The company said consequently, the performance for the previous quarter ended September 30 and the numbers relating to the previous periods have been suitably restated.