Mumbai: India’s largest engineering and construction conglomerate, Larsen & Toubro, lowered its full-year revenue guidance citing project delays and sent its shares down more than 6%.
The company forecast on Thursday revenue would grow 10% for the year to March, slower than 15% projected earlier, but maintained its order growth target at 30%.
“We have reviewed the progress and decided to lower the full-year estimate because of delays in executions and financial closure,” chief financial officer Y.M. Deosthalee said.
Analysts said the difficult conditions could last another quarter or two, but the long-term outlook remained upbeat.
“Revenue booking has been slower-than-expected and in the near term we may see a slowdown, but there should not be any problems over the long term,” said Abhineet Anand, sector analyst at Antique Stock Broking. “Their order book looks good.”
L&T, which has gained from a construction boom across India over the past few years, said it had an order backlog of Rs911 billion ($19.85 billion) at the end of December.
New orders in the December quarter rose 22%, compared with 47% jump in the three months to September. The bulk of the orders came from power, fertiliser and building sectors, but some high-value hydrocarbon sector projects were deferred, the company said.
Shares in L&T, which the market values at $21.6 billion, fell 6.85% to Rs1,524.35 , their biggest drop in six months and pulled the main index down 2.4%.
The stock had jumped 117% in 2009, outshining the 81% rise by the benchmark index.
Net sales fell 6.1% to Rs80.71 billion in the fiscal third quarter ended December from 85.93 billion a year earlier, the company said.
Net profit rose 26% to Rs7.59 billion from Rs6.04 billion, thanks to a one-time gain of Rs625.5 million from reversal of provision on sale of shares in Mahindra Satyam.
A Reuters poll of 12 brokerages had forecast net profit of Rs7.44 billion on net sales of 100 billion.
Operating profit margins for its engineering and construction division, which contributes 80% of revenue, rose to 13.4% from 12.2% a year ago, the company said.
L&T, whose diverse activities include shipbuilding and software, expects order flow to pick up from the infrastructure, power and hydrocarbon segments and sees its strong financial position helping to grab contracts.
“Order flow has picked up and should go faster going forward. We anyway have a huge order book which is to be executed over the next couple of years,” Deosthalee said.
Shares in the company, valued at $21.6 billion, index. At 0939 GMT, Larsen shares were trading down 7.1% at Rs1,518, in a Mumbai market down 2.5%.
State-run power equipment maker Bharat Heavy Electricals Ltd posted a 35.4% rise in quarterly profit, matching market expectations.