L&T Sees Strong Order Inflows

Larsen & Toubro (L&T) is an India-based private sector company dealing in technology, engineering, construction and manufacturing business. L&T generates 90% of the order inflow from the engineering and construction segments.

As per the company's report, the order book stood at Rs 21722 crore as on December 31, 2013 registering a growth of 21% on YoY basis despite the weak investment climate. The major orders came from the infrastructure segment whereas the international order inflow was at Rs 8237 crore. The cumulative order inflow for the nine month period from April-December 2013 stood at Rs 67371 crore, registering a growth of 23% over the nine month period of the previous year.

Various orders received from January 01, 2014 to March 05, 2014.

The company received two big orders worth Rs 2,962 crore and Rs 5,220 crore on January 06, 2014 and February 28, 2014 respectively in the construction business. This depicts that inspite of a sluggish economy the infrastructure business is doing well. Till March 05, 2014 the company received total order worth Rs 11422 crore.

The above table shows that big orders came from various business segments. The infrastructure segment is driven by building and factories, power transmission and distribution, water & renewable energy business.

The transportation infrastructure unit of L&T secured an order worth Rs 1550 crore from Oman for the construction of a road between Bidbid and Sur in the northeast of the country. This project will help L&T to strengthen its presence in the overseas market. 

L&T secured another order worth Rs 1000 crore from the domestic market in its offshore and onshore business sector. The major order in offshore sector was from BG Exploration and Production India (BGEPIL) valued at around Rs 700 crore and in the onshore sector, it won an order worth Rs 300 crore for construction.

The total order received by the company till March 05, 2014 is 11422 crore as compared to Rs 21722 crore for December 31, 2013.

The total order comprises of domestic and international orders. Meanwhile, the company’s orders are slowing down. Due to a sluggish economy and the upcoming election, project announcements by private sectors have reduced. This is seen from the Order Book of the company.

L&T's Financial Performance For The Quarter Ended December 31, 2013 Remained Strong.

The company has recorded a total income of Rs 14387.51 crore for the quarter ended December 31, 2013 registering an increase of 10.55% on a YoY basis over the corresponding year. The company generates its total revenue from the infrastructure segment, power segment, metallurgical and material handling, heavy engineering, electrical and industrial products. 

The revenue from infrastructure, which contributes more than 60% of the total revenue has seen a healthy growth of 23% on yearly basis to Rs 8908.46 crore. The EBITDA of the company was at Rs 1276.49 crore during the December quarter, registering a growth of 29.29% on YoY basis. The EBITDA margin was at 8.87% for the December 31, 2013 as compared to 7% for the December 31, 2012. 

The profit after tax (PAT) of the company has increased by more than 12% YoY to Rs 1136 crore in the Q3FY14 as compared to the corresponding quarter of the previous year. The PAT of the company has increased mainly due to the reduction in raw material cost in the Q3FY14. The raw material cost as proportionate to sales has reduced to 13.4% in the Q3FY14 as compared to 15.78% in the corresponding quarter of the previous year. Due to elevated interest rates, persisting inflation, sliding GDP and IIP numbers have impacted the sentiment in the domestic economy. 

On BSE, the stock closed at Rs 1123.30 (+0.57%) in today's session. In the last one week, the stock has generated a return of 3.23% and in last six months the stock price has appreciated by 60.69%. Looking to the order inflows, we expect the stock to perform well in future. Due to presence in diverse sectors and in different countries, it is expected that the company will be able to steer the medium-term challenges and will be able to meet its growth momentum in the future.