L&T Q3 Results: Revenue Meets Estimates, Profit Falls
Larsen & Toubro Ltd.'s third-quarter revenue rose as orders picked up with an improvement in construction activities.
Revenue of India's largest engineering-to-construction company increased 11.1% year-on-year to Rs 39,562.9 crore in the three months ended December, according to an exchange filing. That compares with the Rs 39,732.25-crore consensus estimate of analysts tracked by Bloomberg.
Q3 FY22 Highlights (YoY)
Net profit fell 16.7% to Rs 2,055 crore, compared with the estimated Rs 2,392.74 crore.
Operating profit up 5.85% to Rs 4,530 crore, against the Rs 4,573.41-crore forecast.
Operating margin remained flat at 11.5%, in with projections.
L&T's order flow stood at Rs 50,359 crore in the third quarter, led by the infrastructure and hydrocarbon segments. Its total order book grew 31% over the year earlier to Rs 3.4 lakh crore.
The company pared debt by Rs 10,000 crore in the third quarter.
The cumulative order inflow for the nine months ended December stood at Rs 1,19,056 crore, a decline of 5% over the year earlier. International orders stood at Rs 51,683 crore for the period, constituting 43% of the total.
Revenue for its mainstay infrastructure segment grew at 16.56%.
IT and technology services reported the biggest growth in revenue in the reported quarter, while defence engineering saw one of the biggest decline.
"Opportunities available in thermal power are limited as most countries are transitioning to renewables," said R Shankar Raman, group chief financial officer and wholetime director at Larsen & Toubro. The segment's ordering activity reflects ESG concerns on fossil fuel-fired power generation, resulting in no major orders being received during the quarter.
The financial segment is in the middle of strategic shift from wholesale lending to retail and rural lending, Raman said.
The EBIT loss under the developmental segment revenue reflects the under-utilisation of the Hyderabad Metro asset due to low ridership induced by Covid restrictions is the primary reason for losses in this segment. The Hyderabad Metro has restructured its debt leading to lower interest cost of Rs 350 crore. This will reflect in the fourth quarter and next fiscal.
The Indian economy continues to remain upbeat with many high-frequency indicators pointing better than the pre-pandemic levels. As the consumer confidence gradually returns, the aggregate demand conditions indicate a sustained recovery, L&T said in a statement.
"We keep refreshing the pipelines every quarter. As we enter into the fourth quarter the pipeline adds up to Rs 4 lakh quarter. Nearly 70% will flow from infra sector like Transportation, Water, Heavy Civil Engineering, Public Healthcare, is looking promising, said Raman.
"There's always a question about timing of the bids. We hope to maintain a strike rate to 15-20% of the total bids. There is reasonable fighting chance that we will be able to meet the guidance," he said. "The guidance of low-to-mid-teens remain so long as the programmes don't get cancelled."
"Normally fourth quarter is a bulky quarter. 35% of the projects are still funded by multi-lateral agencies. 60% of the capex from state government and public sector companies is still not fully consumed," said Raman.