Larsen & Toubro – Beats Street Estimates
DSIJ Intelligence / 24 Jan 2013
Larsen & Toubro announced its Dec 2012 quarter results where it has managed to beat the street estimates. The company posted a topline of Rs 15429.36 crore and a bottomline of Rs 1121.75 crore as against Rs 13998.60 crore and Rs 991.5 crore respectively in Dec 2011 quarter
Larsen & Toubro announced its Dec 2012 quarter results where it has managed to beat the street estimates. The company posted a topline of Rs 15429.36 crore and a bottomline of Rs 1121.75 crore as against Rs 13998.60 crore and Rs 991.5 crore respectively in Dec 2011 quarter. The consensus street estimates were Rs 1100 crore. We have been quite bullish on the capital goods and engineering companies as the macro environment has been improving. In the preceding quarter, we had categorically stated that improvement on the macro front will only lead to increased capex and ultimately resulting into higher order inflow for the Engineering companies.
Results of L&T vindicate the same where its order inflow for the Dec 2012 quarter stood at Rs 19545 crore (up by 14% on a YoY basis). This was on the back of 11% growth witnessed in the Sep 2012 quarter. This has resulted in a total order book of Rs 162334 crore, an increase of 22% on a YoY basis. Again the best part is that international business contributes around 13% of the total order book, indicating towards geographical diversification.
On the operational front, the EBITDA margins stood at 9.56% as against 9.60% in Dec 2011 quarter. Though it is lower than 10.7% achieved in Sep 2012, one needs to understand that the EBITDA margins vary on quarter, depending on the completion of projects.
As regards the segmental performance, Engineering & Construction (E&C) achieved net segment revenue of Rs 17818 crore registering a YoY growth of 16%, despite the weak investment climate. The total order book for the segment stands at Rs 159985 crore as on Dec 31, 2012. In the Electrical & Electronics, the net revenues stood at Rs 830 crore resulting in a modest growth of 7%. The Machinery & Industrial Products could not put in a strong growth on account of slowdown in manufacturing, especially in the capital goods sector.
The Outlook management has stated, “Global economic conditions remain fragile, though green shoots of recovery are visible. The Company is strengthening its presence in select international markets, amidst intense competition.”
We feel the results have been good and we recommend the investors to go long on the scrip with a perspective of one year.
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