L&T Q1 Results: Profit Falls By Half As Lockdowns Stall Construction

Larsen & Toubro Ltd.’s first-quarter profit halved as the pandemic-led lockdown disrupted construction activity across the country.

Net profit of India’s largest engineering-to-construction company decreased 50.4% quarter-on-quarter to Rs 1,556.2 crore in the three months through June, it said in its exchange filing. That compares with the Bloomberg consensus estimate of Rs 1,503.4 crore.

  • Revenue fell 39% over the preceding quarter to Rs 29,334.7 crore, compared with the consensus estimate of Rs 48,602 crore.

  • Operating profit fell 50.4% to Rs 3,171.5 crore. Analysts polled by Bloomberg were expecting Rs 3,325.2 crore.

  • Operating margin fell to 10.8% compared with 13.2% sequentially.

On a year-year on basis, revenue rose 38%, Ebitda increased 95.7% while profit rose 413.4%. That came as the government had imposed a complete national lockdown in April-May 2020, impacting business severely a year earlier.

For the quarter ended June 2021, the company received fresh orders worth Rs 26,557 crore—which were lower than a quarter ago. Consolidated order book stood at Rs 3,23,721 crore, with international orders comprising 20% of the order book.

"We look at this with optimism. We have the largest backlog of orders in our history. We have adapted in a good manner after handling Covid-1 and Covid-2," SN Subrahmanyan, managing director and chief executive officer at L&T, said in a post-earnings conference call. "There are options with us to handle Covid-3 as we have understood Covid-1 and Covid-2 that helps to prepare us to handle business and provide better results in Q2, Q3 and Q4,."

He called the rise in commodity prices worrying even as they have eased a bit.

Chief Financial Officer R Shankar Raman said 70-80% of the contracts have pass-through but billing takes place at a different time. "So over the entire life cycle of the project, the impact could be around 25 bps."

Segment Revenue

L&T's infrastructure segment was the most impacted, with its revenue falling 60.12% on a sequential basis.

Outlook

The company said the second wave of Covid-19 pandemic impacted consumption and investment momentum severely.

"With the waning of the second wave of the pandemic and lockdown restrictions progressively being eased in the recent weeks, signs of pick-up in economic activity is visible," it said in a statement.

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