Mumbai: India’s largest engineering and construction firm by market value, Larsen and Toubro Ltd (L&T), on Monday reported a better-than-expected third quarter net profit that rose 40%, and raised its revenue forecast for the year as it secured more domestic and international orders.
L&T posted a profit after tax of Rs481.79 crore for the October-December period, up from Rs343.90 crore in the year-ago quarter. Its net sales grew 55% to Rs6,382.68 crore from Rs4,115.69 crore last year.
Going strong: L&T chairman and managing director A.M.Naik. (Photo: Ashesh Shah/ Mint)
“We expect revenue to grow 35-40% for the full year,” L&T chief financial officer Y.M. Deosthalee said from Dubai, where the firm’s board met to finalize quarterly results. “Earlier, we were saying that our revenue would grow 30-35%,” he added.
Shares of the firm, which had lost as much as 5.5% to touch an intra-day low of Rs3,675, closed 1.18% down at Rs3,844.50 on the Bombay Stock Exchange (BSE) on Monday. L&T’s share price has risen more than 138% in the last one year, outperforming the the Sensex, which has gained about 28%.
For the nine months to December, L&T’s profit after tax grew 72% to Rs1,206.66 crore against Rs702.25 crore in the year-ago period, while net sales grew 44% to Rs16,387.83 crore from Rs11,322.28 crore last year. Orders rose by 31% to Rs30,045 crore.
An analyst at a Mumbai-based brokerage, who did not wish to be named, said, “Revenue growth was quite impressive at the group, much above what the street was expecting. But the margins have not improved as expected. We were looking at a growth of about 100 basis points in margins, while L&T managed about 30 basis points.”
L&T said the engineering and construction segment, which accounts for more than 75% of the group’s business, saw growth of 57% in its revenue to Rs4,962 crore, while orders for the segment rose 40%. Two other segments also witnessed healthy growth, with electrical and electronics segment revenue growing 28% to Rs616 crore and the machinery and industrial products segment revenue increasing 45% over the year-ago quarter to Rs590 crore.
The firm has been winning orders internationally, with a majority of them in power transmission and distribution in the Gulf region, where an oil-driven production boom is driving investments in oil and gas production and distribution facilities. L&T has announced orders worth more than Rs6,000 crore this month, with about Rs2,700 crore of them being export orders.
L&T’s orders during the October-December quarter rose 37% to Rs13,019 crore, compared with a year ago, and the company expects to maintain growth in the near to medium term, the company said in a statement. The company had an order backlog of about Rs50,000 crore at the end of December, Deosthalee said.
The share of revenue from international operations constituted 18% of the gross revenue in the December quarter. L&T aims to boost this share of overseas business to 30% over the next few years.
Devidutta Tripathy is with Reuters.