Larsen and Toubro announces 50% rise in Q4 net

Larsen and Toubro announces 50% rise in Q4 net

Larsen and Toubro Ltd, India’s largest publicly traded engineering company, on Tuesday announced a 50% rise in its net profit to Rs700.77 crore for the quarter ended 31 March, driven by increase in operating margins across the business segments of the company. The company’s net sales grew 35.33% to Rs6,246.24 crore for the same quarter.

The Larsen and Toubro stock closed at Rs1,856.50 on the Bombay Stock Exchange, up 4% on a day when the benchmark Sensex made a marginal gain of 0.77%. “The performance is much better than we expected," says Shreya Doshi, an analyst with Mumbai brokerage Enam Securities Ltd.

“L&T has increased margins in all segments of business. The operating margins for engineering sector are up three percentage points, while that for electrical and electronics manufacturing up one percentage point and for industrial businesses, up four percentage points," says Ravindranath Nayak, assistant manager with IDBI Securities Ltd.

Larsen and Toubro’s consolidated net profit for the year to 31 March grew at 75.19% to Rs2,261.21 crore, driven by a 23.32% growth in the consolidated net sales to Rs20,347.85 crore,

Among all its upcoming projects, Larsen and Toubro is most bullish on its shipbuilding business. “There is a huge scope for shipbuilding business. If India does not do it now, we will be left behind," says Larsen and Toubro’s chairman and managing director, A.M. Naik. It will invest nearly Rs2,000 crore in the business.

The company has already begun working on shipbuilding yard at Hazira. “We are making ships which are bigger than the ones being made in India, but smaller than the ones being made outside," Naik adds.

In power plant equipment. Larsen and Toubro’s proposed Rs700 crore joint venture with Mitsubishi Heavy Industries to manufacture super critical boilers is nearing the stage of narrowing down on the location for the factory. “We will announce it in the next one month," says K. Venkatramanan, president, operations, for Larsen and Toubro.

Super critical boilers are used in power plants generating more than 500 megawatts.

On the fiscal front, Y.M. Deosthalee, Larsen and Toubro’s chief financial officer, said the firm wouldn’t be affected by the appreciation of the local currency as its imports matches exports. The rupee is now trading at its nine-year high against the dollar.

Staffing, though, could be a problem area. Naik said that the company will invest in training employees. “Finding the talent is not a problem. But training and retention is a concern," he said.