Engineering major Larsen & Toubro (L&T), which today reported a 29.5 per cent increase in net profit for the quarter ended March 31 at Rs 3,025 crore is eyeing a revenue growth of around 12 per cent in fiscal 2018.
The company had reported a net profit of Rs 2,335 crore in the corresponding quarter of the previous year.
It total income from operations for the January-March stood at Rs 36,827.99 crore as against Rs 32,875.51 crore in Q4 of FY17, registering a growth of 12.02 per cent.
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"Overall the performance was satisfactory despite the headwinds and the challenging environment in which we operate. But we hope to see some turnaround in the current fiscal and we are expecting around 12 per cent increase in revenues and 12-14 per cent increase in order inflows in FY18," L&T Group CFO R Shankar Raman told reporters here.
For the fiscal, L&T's revenues grew by 7.88 per cent to Rs 110,011 crore against Rs 101,975.34 crore in FY16, while its profit rose 43 per cent to Rs 6,041 crore.
L&T won fresh orders worth Rs 142,995 crore at the group level during the year in the face of a challenging business environment. International orders contributed nearly 29 per cent at Rs 41,507 crore of the total order inflow, he said.
"Order wins in infrastructure segment, hydrocarbon and heavy engineering segments contributed to the orderflow during the year. The orders that we bagged in Q4, nearly 30 per cent were from domestic market. This we hope is the beginning of the investment cycle in the domestic market which will enable increase in capacity utilisation," Raman said.
On the order inflows from the international market, Raman said there has been a slowdown especially from the Middle East mainly due to the falling of oil prices.
"These markets have adopted conservative mode of investment. At the same time, we have decided to be selective in our approach while bidding and so there is a deliberate low intake," he said.
Company's Group Executive Chairman AM Naik said, "the times are very challenging but we continue to feel the prospects are good if the initiatives taken by the government are well implemented."
He said most of the projects, especially in the defence sector which were supposed to come in last fiscal, have been delayed.
"The NPD contracts, which were to the tune of over Rs 20,000 crore from the Navy were postponed. If that would have come, we would have surpassed our guidance on order inflows. Orders for six 75 I submarines are not awarded yet and I don't feel it will come in this fiscal as well. The government has allowed strategic partnership with private sector but it should be parallel," Naik said.
He further said the realty market was also impacted, especially after demonetisation. "Due to these reasons, we consequently stopped certain projects. But we feel the momentum will be back. We removed nearly Rs 18,000 crore worth of non-moving projects. In the last few years we have adopted this strategy of removing non-moving projects from our order books and we report only executable contracts," he said.
For FY18, L&T expects orders coming in from hydrocarbons, power, defence and infrastructure segments, exports of heavy machinery, among others.
Naik further said there is still time for private sector capex to come into the system.
"Today there is enough liquidity with the banks, but they don't want to fund sectors which require resources. The sectors where they want to fund, the promoters are worried about repaying the existing debt and not borrowing. Private sector is almost moving out of the scene and we are looking only if the government can spend," he said.
Naik said the company is looking at participating in hybrid annuity model based projects and is also exploring opportunities of setting up infrastructure investment trust (InvIT).
"We continously look at restructuring our businesses. There could be some restructuring or acquisition in infotech, IT and IT engineering segments. With a debt-equity ratio of 0.23:1, we are in a comfortable position to borrow for such plans. We expect the investments could be around Rs 5,000 crore, which would be a mix of debt and equity," he added.
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