Larsen & Toubro, the country’s biggest engineering company, said first-quarter profit rose a better-than-estimated 33 per cent as the oil-rich West Asian nations invested in factories, roads, ports and refineries.
Net profit in the three months ended June 30 climbed to Rs 502 crore, or Rs 16.89 a share, from Rs 377 crore, or Rs 11.94, a year earlier, the Mumbai-based company said in a statement today. Sales rose 53 per cent to Rs 6,900 crore.
Larsen aims to almost double revenue from building luxury condominiums, steel plants and oil rigs in the west Asia as record oil prices spur infrastructure spending. Revenue from the region should account for 25 per cent of total sales in two years, compared with the current 16 per cent, Chairman A M Naik said.
“We expect to win more orders in the Persian Gulf, especially in the midstream and downstream projects,” he said in an interview on July 24. “We have set up five offices in the region to tap demand.” The shares of the company rose 3.8 per cent to Rs 2,725.15 on the Bombay stock Exchange.
Larsen is also seeking orders in Southeast Asia and has secured its first contract from Petronas Gas Berhad, the natural gas distribution unit of Malaysia’s state oil company Petroliam Nasional, Naik said. Growth in the oil-funded economies will counter any slowdown in India, Naik said.
India’s May industrial production grew at 3.8 per cent, the slowest pace in more than six years, as spiralling prices prompted consumers to cut back purchases of cars, fridges and other manufactured goods, the statistics office said on July 11.
“We have reviewed our business scenario twice in the past four months because the situation in India was deteriorating and we concluded we are doing okay,” he said.
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Orders are forecast to climb 35 per cent this financial year from Rs 53,000 crore the previous year, he said. Larsen has begun three new units to handle contracts in the power, shipbuilding and railway sectors.
The engineering and construction segment that accounts for almost 80 per cent of the company’s revenue witnessed a 28 per cent rise in orders, the company said.