L&T March quarter profit rises 8% to Rs 3,418 cr on improved operations

Larsen & Toubro revenues up 10% to Rs 22,934 cr; firm guides for 10-12% order inflow growth in FY20.

Engineering conglomerate Larsen & Toubro (L&T) reported an 8-per cent rise in its consolidated profit after tax (PAT) at Rs 3,418 crore owing to improved operations. The company’s management indicated business environment remains challenging, though early signs of private investment were visible.

For the January to March 2019 period, L&T reported PAT at Rs 3,418.24 crore, higher than Rs 3,167.47 crore for the same period a year ago. Consolidated gross revenue for the company stood at Rs 44,934 crore, 10 per cent higher on year-on-year basis. Company earnings before interest, taxation, depreciation and ammortisaton (EBITDA were at Rs 5,600 crore, 3 per cent higher from Rs 5,400 crore reported in the corresponding quarter a year back.

R Shankar Raman, whole-time director and chief financial officer for the company, said the financial performance is impressive in the backdrop of a challenging environment.  “And an added distraction of the largest dance of democracy (elections),” he said.
 

For 2018-2019, the company reported an order inflow of Rs 1.76 Trillion, 16 per cent higher from Rs 1.52 Trillion reported in financial year 2017-2018. At the start of FY2019, the company guided for 10 to 12 per cent rise in order inflow and 12 to 15 per cent growth in revenue.  With a revenue growth of 18 per cent for FY2019, L&T exceeded its guidance.

Company officials remain optimistic for the current financial year and maintained a similar growth guidance for FY2020. Company officials expect order inflow growth to be leaning towards the second-half of the current financial year, once the new government takes charge.

As of March 2019, L&T’s total order book was at Rs 2.93 Trillion, with international orders contributing 22 per cent of the total order book. For the March 2019 ended quarter, L&T saw domestic order decline on a yoy basis, while international orders improved. In FY2019, the company also moved out orders worth Rs 9,000 crore from its order book, marked as slow-moving.

S N Subrahmanyan, chief executive officer and managing director for L&T added the financial year under review also saw the beginning of private investments. “The spate in airport orders has helped the share of private sector investment to increase, commercial real estate along with health is also contributing. The private investment share is beginning to look up compared to the past,” he said.  Subrahmanyan, however, expects private investments to take another nine to twelve months to show a meaningful recovery.

“Very few balance sheets have the financial strength of L&T. All of us are focusing on return on equity (ROE) improvement, along with cost and productivity efficiency. Private sector needs to be presented a very strong case to commit capital,” Shankar Raman added.

Segment-wise, L&T’s infrastructure business took a margin hit, which was lower at 8.5 per cent for the full year 2018-19, lower from 9.8 per cent reported a year ago. Company officials added, cost pressures encountered in a few projects and cost provisioning for pending claims in markets like Middle East, contributed to the margin hit. Infrastructure margins are expected to improve in the current financial year.