Engineering major Larsen and Toubro (L&T) beat analysts’ expectations with 17 per cent year-on-year sales growth and a 42 per cent rise in net profit in the quarter ended September. The stock reacted sharply to the result on Monday and hit a 52-week high of Rs 1,673.80. It closed the day at Rs 1,668.20.
In a tough economic environment, the company secured orders worth over Rs 20,000 crore, a rise of 30 per cent over last year’s figure. As a result, L&T expects to meet its order book guidance for the financial year. Chief Financial Officer R Shankar Raman said, “We are not revising our guidance. We had given a guidance of 15-20 per cent over Rs 70,000-crore orders last year and we are lining ourselves up for Rs 80,000 crore. We are on course and will be able to sustain the order inflow.”
Revenues grew 17 per cent to Rs 13,328 crore. The net profit at Rs 1,137 crore was on the back of improved margins in key sectors such as engineering and construction. Profits received a boost from a one-time gain of Rs 222 crore from the sale of the plastic machinery business and reversal of provisioning in the account books. Excluding that, the net profit stood at Rs 915 crore.
“In a difficult environment, the company has been able to manage its profitability well. Its key challenges include replacing captive orders, about 15 per cent of the order intake in FY12, as the company is reluctant to commit further capital on infrastructure development, a weak industrial capex cycle and sluggish ordering of road projects by the National Highways Authority of India,” said Sanjeev Zarbade, vice-president (private client group research), Kotak Securities.
CEO K Venkataramanan said the major thrust remained on the Gulf but in two-three years he expected more orders from CIS countries and Africa.