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