S N Subrahmanyan, managing director, Larsen and Toubro. Photo: Kamlesh Pednekar
Engineering major Larsen and Toubro reported a 46 per cent jump in consolidated net profit for the June quarter to Rs 893 crore from the same period a year before.
The Street estimate had been Rs 928 crore. Order inflow, however, fell 11 per cent to Rs 26,352 crore, lowest in three years, said Bloomberg, owing to lumpy orders in the comparative quarter.
Consolidated revenues rose 10 per cent to Rs 23,990 crore from a year before, marginally better than the consensus estimate of Rs 23,850 crore. Earnings before interest, taxation, depreciation and amortisation were Rs 2,060 crore, up nine per cent.
“The rise in net profit was due to an improved performance of subsidiaries and associates. Happy to report strong numbers in an environment that continues to remain the same,” said Shankar Raman, chief financial officer.
The company’s press statement added that the quarter had seen lower economic growth in the country in the aftermath of demonetisation. Bank credit to industry remained muted and investment momentum was largely driven by public sector spending.
Company officials attributed the decline in new order flow to a lumpy order in the hydrocarbon sector in the comparable quarter last year. The management says it is confident of meeting the forecast it gave in May for 2017-18 on order inflow and revenue. These it respectively expected to grow by 12-14 per cent and 12 per cent. It said domestic order inflow for the June quarter compensated for a weak international inflow trend.
“The government realises that before the next elections, there has to be a serious capital spend towards developmental expenditure. We see that happening today,” said S N Subrahmanyan, managing director.
The consolidated order book stood at Rs 2.63 lakh crore at the end of the quarter, up two per cent on a year-on-year basis.
The segments of infrastructure, heavy civil engineering, power transmission & distribution and water show improvement. However, real estate, the construction business and the power equipment segment remain under stress. The infrastructure segment saw 16 per cent increase in revenue to Rs 10,539 crore, with better project execution.
On the nationwide goods and services tax rollout, officials said they expected the impact for the company to range from positive to neutral.
“The electricals division saw some inventory clearance due to the rollout. However, we are in wait and watch mode,” Raman added.
On plans to consider an infrastructure investment trust model for its infrastructure assets, the company indicated it was evaluating the feasibility and investor response to such instruments.