Q1 Results: L&T Maintains Growth Forecast Even As It Misses Estimates
L&T’s profit rose 21 percent year-on-year to Rs 1,472 crore in the June quarter while revenue rose 9.7 percent to Rs 29,636 crore.
Larsen & Toubro Ltd. expects revenue and order book growth to remain stable even as it missed estimates in the quarter ended June.
The Mumbai-based company’s revenue rose 9.7 percent year-on-year to Rs 29,636 crore, according to its exchange filing. That compares with the Rs 31,295-crore consensus estimate of analysts tracked by BloombergQuint. The infrastructure developer said the Rs 9,268-crore international revenue clocked during the quarter contributed 31 percent to the total revenue.
Despite missing estimate, L&T maintained its revenue growth guidance at 12-15 percent, with an order inflow growth forecast of 10-12 percent.
The construction and engineering company’s net profit rose 21 percent year-on-year to Rs 1,472 crore in the three months to June. That’s below analysts’ estimate of Rs 1,560-crore.
Earnings before interest, tax, depreciation and amortisation rose 20 percent to Rs 3,319 crore. Ebitda margin expanded 100 basis points over the last year to 11.2 percent, compared with an estimate of 10.9 percent. The company expects margin to remain stable.
The L&T management, at a press meet after announcing results, said that its margin, excluding services, will be at 10.5 percent, while the order inflow for the current fiscal will be “back-ended”.
Orders from the central and state governments were affected due to the general elections, the company said, adding it won orders worth Rs 38,700 crore in the June quarter. Strong orders from public sector undertakings and the private sector enabled growth during the quarter, it said.
The government’s measures, the construction company said, are likely to provide a fillip to the investment momentum in the domestic market. “A pro-incumbency mandate has created an environment of political stability, which bodes well for policy continuity, fiscal rectitude and focus on infrastructure build-out.”
L&T Q1 Results 2019-20: Other Highlights
- The company’s other income rose to Rs 384 crore from Rs 228 crore a year ago.
- Orders worth Rs 38,700 crore were bagged in the quarter. Of this, international orders worth Rs 9,005 crore constituted 23 percent of the total order flow.
- Consolidated order book of the group stood at Rs 2.94 lakh crore as on June 30, with international order book constituting 21 percent of the total order book.
On Mindtree
L&T said the financials of Mindtree Ltd. were not included in this quarter but will be counted in the three-month period ending September 30. The L&T-Mindtree acquisition marked India’s first-ever hostile takeover in the information technology space. The company said it will soon announce the leadership of Mindtree.
L&T had bought 20.32 percent shares in Mindtree from VG Siddhartha and his Coffee Day Enterprises Ltd. for more than Rs 3,000 crore in March. It later shored up its holding with more stake purchases from the open market, before making an open offer for an additional 31 percent stake, taking its shareholding to over 60 percent.
Key Highlights From The Management
- A focus on resource augmentation in the budget is expected to enable the government to channelise spending on infrastructure development.
- The company said it looked forward to a period of increased investment momentum and continued growth.
- Initiatives towards improved productivity, cost efficiencies derived from leveraging digital technology, capacity utilisation and capability enhancement are expected to help maximise shareholder returns on a sustainable basis.
Segment-Wise Revenue (YoY)
- Customer revenue from the infrastructure segment rose 14 percent to Rs 13,865 crore.
- The company’s hydrocarbon segment secured orders worth Rs 3,424 crore in the quarter which is 28 percent lower than the year-ago period, with no major international orders, the filing said.
- The power segment saw its customer revenue nearly halve to Rs 561 crore.
- IT and tech services revenue surged 15 percent to Rs 3,819 crore. However, the operating margin for this segment contracted to 23.2 percent from 24.8 percent due to high wage costs and visa charges.
On Tuesday, L&T shares rose 0.44 percent to Rs 1,410.00 apiece on the BSE while the benchmark Sensex shed 0.13 percent to end the day at 37,982.74 points.