Engineering major Larsen &Toubro surprised the street with a strong 36 per cent increase in the March 2008 quarter top line though operating margins were more or less flat at 13.2 per cent.
For the full year FY08 though, the margins improved by about 100 basis points to 11.3 per cent on stand-alone higher revenues, up 41 per cent at Rs 24,855 crore.
The growth in the top line was driven by the engineering and construction division which contributes 75 per cent to revenues and posted a 12 per cent operating margin during FY08.
The company ended FY08 with a smart growth in net profits of 55 per cent at Rs 2,173 crore and with the management announcing a bonus issue, the stock rose 6.6 per cent on Thursday.
The good news is that order book grew about 38 per cent during the March quarter and is now in the region of Rs 53,000 crore. Moreover, the management believes that order inflows should continue to remain strong and well grow by another Rs 10,000 crore by March 2009. The management doesn't seem to be worried about the slowdown in the economy and is fairly confident that growing the top line by 35-40 per cent over the next couple of years should not be a difficult proposition.
That's because orders, which now account for about 18 months sales, are dispersed across 15 sectors including infrastructure and power.
Stand-alone earnings at Rs 72.76 in FY08 are expected to increase by about 30-35 per cent in FY09 to Rs 97- 98 or thereabouts. This should materialise on the back of a top line that is estimated to grow by about 30 per cent to around Rs 32,300 crore. Since the start of 2008 the stock has lost 35 per cent, underperforming the Sensex which has lost 19 per cent.
At the current price of Rs 2,889, the stock trades at 28-29 times one year forward and is a tad expensive, notwithstanding the promising outlook for the company's business.
IndianOil: Profit spill
Only a rise in the retail prices of petrol, diesel and LPG can bail out India's biggest oil refiner and marketer Rs 2,44,969 crore IOC. Or else the government needs to lower import duties and other levies.
As it is, higher interest costs and losses from selling products at lower than their cost prices, has resulted in a net loss of Rs 414 crore in the March 2008 quarter, compared with a net profit of Rs 1,503 crore,a year earlier. IOC had last declared a quarterly loss in the December 2005 quarter.
The quantum of oil bonds dished out by the government and subsidies provided by GAIL and ONGC obviously haven't been enough because IOC's operating profit margin (opm) plummeted 844 basis points to 0.86 per cent in Q4 FY 08, even though the firm's total income rose 36 per cent to Rs 71,900 crore.
IOC has highlighted that it needed to be compensated to the tune of Rs 3,259 crore in the March 2008 quarter for selling auto-fuels, domestic LPG and kerosene below the cost price.
The silver lining was the better gross refining margin at $9 per barrel
