Mumbai: Larsen & Toubro Ltd (L&T), India’s largest publicly traded engineering and construction company, declared 140% growth in its profit after tax to Rs376.85 crore for the April-June quarter, on the back of strong orders and other income of Rs210.10 crore — largely driven by gains from the rupee’s appreciation. The company’s net sales for the quarter grew 29.6% to Rs4505.21 crore.
Shares of L&T on the Bombay Stock Exhange closed at Rs2382, up 2.25% compared to a 1.63% rise in the Sensex. “The results have been very good. They are in line with our expectations. Order inflows for the quarter have been strong. The numbers show that growth prospects are very good for the company,” said Shreya Doshi, an analyst tracking L&T at Enam Financial Consultants Private Ltd, a domestic brokerage.
Another analyst tracking L&T at a Mumbai-based brokerage said the results are better than what was expected. “L&T has shown good margins at EBIDTA (earnings before interest, depreciation, tax and amortization) level. The Q1 numbers are quite positive for the company,” he added. The analyst did not wish to be identified.
L&T’s other income was driven by the appreciation of the rupee that lowered the interest cost on foreign currency loans. “Other income for the quarter includes a net gain of Rs133.45 crore relating to exchange differences on foreign currency borrowings and deposits,” the company said in a release.
“The Rs133.45 crore is due to the savings on our borrowings. We borrow in yens and dollars. The rupee’s appreciation has helped us ,” said a spokesperson for L&T. “Excluding gains from exchange differences on foreign currency denominated borrowings and deposits, profit after tax for the quarter ended 30 June 2007 grew by 57%,” the spokesperson added.
L&T’s machinery and industrial products division registered the highest growth among the diversified company’s divisions and grew its profits by 54.86% to Rs89.76 crore. “Increased activity in the domestic industrial, infrastructure and construction sectors continues to benefit the businesses of this segment. Besides increased volumes, higher price-differentials and improved manufacturing efficiency contributed to better profitability in this business segment,” the company’s release said.
The engineering and construction segment registered the second highest growth in profit among all segments — 49.51% to Rs296.97 crore. “The operating margin of this segment recorded an improvement of about one percentage point attributable to smarter execution and project management,” the company said.