A trainee learns carpentry at L & T Construction Skills Training Institute in Panvel, India. (Photographer: Adeel Halim/Bloomberg)

Q3 Results: L&T’s Profit Rises For Twelfth Straight Quarter

Larsen & Toubro Ltd.’s profit rose for the twelfth straight quarter on the back of higher other income.

Net profit rose 37 percent year-on-year to Rs 2,042 crore in the three months ended December, India’s largest construction and engineering company said in an exchange filing today. That compares with the Rs 1,900-crore consensus estimate of analysts tracked by Bloomberg.

The company’s revenue rose 24 percent on a yearly basis to Rs 35,709 crore. Its other income stood at Rs 606 crore during the period.

L&T bagged orders worth Rs 42,233 crore at the group level during the quarter. Its consolidated order book stood at Rs 2.84 lakh crore.

The company said its consolidated order book grew over 5 percent on a yearly basis in the December quarter due to a delay in contracts awarded, mainly in the transportation infrastructure, heavy civil infrastructure and power businesses. International orders, comprising 27 percent of the total inflow, stood at Rs 11,454 crore during the quarter.

The pipeline looks encouraging and we are hopeful that we will stay on course in so far as our guidance of 10-12 percent is concerned, said L&T's Chief Financial Officer R Shankar Raman on the company’s fourth quarter forecast, adding that the general election may become a dull period for the order book. “It will be prudent to plan that the last bit of the fourth quarter and much of the first quarter will be a dull period as far as fresh ordering is concerned."

On surge in other income, Raman said, "Much of the borrowing that the company raised to keep the liquidity buffer within the system, given the liquidity constraints the markets were going through in October-December period, was not consumed in working capital but invested in safe treasury instruments."

L&T’s earnings before interest, tax, depreciation and amortisation rose 27 percent to Rs 3,997 crore compared with estimated Rs 3,653 crore. The operating margin expanded 30 basis points to 11.2 percent in the December quarter.

Segment-Wise Revenue (YoY)

The company's infrastructure segment saw a 24 percent surge in its revenue to Rs 18,206 crore, securing orders worth Rs 21,908 crore in the October-December period. International orders contributed to around 23 percent of the total order inflow of the segment during the quarter.

The company's power segment, however, continued to dip with a 29 percent fall in its revenue to Rs 905 crore, year-on-year. It attributed this dip to limited opportunities and intense competition in the segment. “The order book has been declining and is not getting replenished adequately by new orders,” the CFO said at the press conference.

  • Heavy engineering revenue jumped 82 percent to Rs 605 crore, owing to a low base.
  • IT and Tech services revenue surged 29 percent to Rs 3701 crore.
  • Financial services’ revenues were at Rs 3,259 crore, a 24 percent rise.

Shares of L&T closed 0.7 percent lower before the results announcement, in line with the NSE Nifty 50 Index’s fall.