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Business News/ Companies / Company Results/  L&T Q4 net improves 6% even as margins narrow

L&T Q4 net improves 6% even as margins narrow

L&T shares closed 1.53% higher on the BSE on Wednesday at ₹3,485.2. The Sensex ended the session 0.06% lower

The engineering and IT conglomerate reported a net profit of ₹4,396 crore, against Bloomberg analysts' estimates of ₹4275 crore. (Mint)Premium
The engineering and IT conglomerate reported a net profit of 4,396 crore, against Bloomberg analysts' estimates of 4275 crore. (Mint)

Mumbai: Aided by better order execution and higher global revenues, Larsen & Toubro Ltd on Wednesday beat Street estimates to clock a 10% increase in March quarter net profit. The engineering and IT conglomerate reported a net profit of 4,396 crore, against Bloomberg analysts' estimates of 4275 crore. 

Revenue for the quarter grew 15% to 67,079 crore. Earnings before interest, tax, depreciation and amortization (Ebitda) was 6% higher at 7,234 crore. Ebitda margin, however, narrowed by nearly a percentage point to 10.8%, thanks to cost inflation and higher capital expenditure.

Despite order inflows thinning by 5% in the last quarter ahead of general elections, for FY24 as a whole, the company recorded a 31% growth in order inflows to cross 3 trillion.

“Normally, Q4 sees the most order inflows, almost 40% of the annual orders. But we knew there were elections this year, so we pushed hard in the first three quarters and got 75% of the orders that we were expecting during the year," R. Shankar Raman, chief financial officer, said in a media call.

Consolidated order book stood at 4.8 trillion as of 31 March, 20% more than a year ago. More than a third of these orders were from international markets.

Profit for the full year surged 25% to 13,059 crore, while revenue grew 21% to 2.2 trillion. Ebitda for the year was 13% higher at 23,494 crore with an Ebitda margin of 10.6%, down 69 basis points.

Also read: L&T Q4 Results: Net profit rises 10.3% to 4,396 crore, dividend declared; 5 key highlights

“A combination of cost inflation, time overrun, delayed settlement of claims and investment for growth account for the decline in the margins of the infrastructure segment and the margins of the company overall," Shankar Raman said.

Margins in the infrastructure projects segment narrowed from 7% in FY23 to 6.2% in FY24.

Shankar Raman said that the company expects FY25 order intake to grow by 10% on the high base of FY24. Revenue is expected to grow 15%, aided by the company’s robust order book position.

However, the company expects margins to remain at the same level in FY25, he said.

“Despite the ongoing geo-political turmoil globally, the growth story of India continues to power forward, and we as a company are proud to be an integral part of this change. The tailwinds of India’s economic growth will continue due to the impact of structural reforms, strengthening physical and digital infrastructure, improving institutional strength and strong governance," said S.N. Subrahmanyan, chairman and managing director.

The company’s return on equity (RoE) during the year improved to 14.9% from 12.2% a year earlier. The company targets reaching 18% RoE by FY26.

L&T's largest segment—infrastructure projects—secured orders of 31,340 crore, which was 24% lower year-on-year, mainly on account of the ongoing general elections. The segment’s order book stood at 3.1 trillion as of 31 March, with a 27% share of international orders.

Also read: Larsen & Toubro Q4 results today: Here's what analysts expect from financials to order in flows

L&T shares closed 1.53% higher on the BSE on Wednesday at 3,485.2. The Sensex ended the session 0.06% lower.

S&P Global Ratings on Wednesday assigned 'BBB+' long-term issuer credit rating to the company, which is two notches above India's sovereign rating. The only other Indian company to be rated BBB+ is Reliance Industries.

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Nehal Chaliawala
Nehal writes on everything corporate from the financial capital of India. His areas of interest include corporate strategy, deals, regulations and government schemes.
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Published: 08 May 2024, 09:34 PM IST
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