L&T Q3 rises 19 per cent: stock zooms up 5 per cent

Engineering and infrastructure giant Larsen & Toubro (L&T) posted its third quarter results on Friday after the market hours. Profits for Q3FY16 increased by 19 per cent on a yearly basis, primarily aided by other income. Firms order book was higher by 14 per cent on a Y-O-Y (year on year) basis. 

L&T recorded a consolidated revenue of Rs 25,829.3 crore for the December quarter, compared to Rs 23,847.9 crore in the same period last year, therefore, registering a Y-O-Y growth of 8.4 per cent mainly led by infrastructure; power; and hydrocarbon divisions. Operationally EBITDA (Earnings Before Interest, Depreciation and Amortization) decreased by 8.2 per cent Y-O-Y to Rs 2,649 crore as against Rs 2,890 crore last year. Margins for the quarter in review shrank by 180 basis points to 10.3 per cent from 12.1 per cent in the previous year. Margins were impacted due to increase in the employee expenses; and attributed to the sales and distribution cost, which were higher by 25 and 35.3 per cent on a Y-O-Y basis, respectively. Net profit rose to Rs. 1,034.80 crore in the three months ended 31 December, from Rs.866.54 crore a year ago, reflecting a growth of 19.42 per cent. 

Company garnered fresh orders worth Rs 38,528 crore at the group level during the quarter in evaluation. The international order inflow during the quarter ended December was at Rs 1,115 crore, constituting 29 per cent of the total order inflow. Major orders during Q3 were secured by the infrastructure segment. On a consolidated basis total order book of the group stands at Rs 2,56,458 crore at the end of Q3FY16, i.e. higher by 14 per cent on a yearly basis, with International order book constituting 27 per cent of the total. 

Close to 75 per cent of the total order book is from the infrastructure segment, which saw a revenue increase of 2 per cent Y-O-Y due to poor clearances; and tardy payment progress impacted the segment negatively. 

Revenue from power segment doubled during the quarter to Rs 2,291 crore owing to the progress in coal and gas based projects under execution. 

Hydrocarbon segment saw an improvement as revenue increased by 22 per cent on a Y-O-Y basis to Rs 2,165 crore. The segment EBITDA margins stand at 4.2 per cent for the quarter ending December 2015, vis-à-vis negative margins during the corresponding quarter of the previous year.

IT & technology segment recorded increase in revenue by 15 per cent on a Y-O-Y basis to Rs 2,273 crore. On the margin front, it improved by 230 basis points to 22.8 per cent.

Taking an outlook over the future, the company said that domestic economy continues to face headwinds for growth despite favourable macroeconomic factors. L&T expects private sector capex to be muted for some more time. 

Reacting to the good set of numbers the stock jumped more than 5 per cent in early trades to hit an intra-day high of Rs 1,157.65 Anticipating a positive result L&T scrip rallied on Friday as it was up by nearly 2.5 per cent. The stock has been on a correction mode over the period of past 6 months due to performance related factors which were aggravated by the equity market slump. Recently after hitting a 22-month low the stock has smartly bounced back from those levels.