MUMBAI: Engineering and infrastructure major Larsen and Toubro Ltd (L&T) is expected to report a net loss of ₹467.8 crore in the June quarter of FY21, according to a Bloomberg poll of two analysts. Consolidated revenue, according to a poll of 5 analysts, is expected to touch ₹20,678 crore, during the strictest covid-related lockdown in the world.
In Q1FY20, L&T had reported revenue of ₹29,636 crore and net profit of ₹1,473 crore
The company’s management has said in previous months that the loss of migrant labour during the lockdown has been a challenge in completing projects. At the end of the March quarter, 90% projects of the company were functioning with 40% labour strength.
Slow moving orders (5% of order book), stoppage of Andhra Pradesh projects, funding constraints and impact of covid-19, delay in Mumbai coastal road project and metro project impacted execution in Maharashtra have slowed down progress in the overall order book. In Q4FY20, the company went consciously slow on execution to maintain its working capital.
In its FY20 annual report, Chairman AM Naik said that he expected to see better economic activity in the second half of the current fiscal. “The pandemic and its fallout makes it difficult to forecast the future with certainty," he said, adding it was premature to predict any business outcome. The company still sees opportunities in government buildings, data centres, healthcare infra, airports, metro rail, water projects, hydel projects, expressways, and hydrocarbon (onshore and offshore) projects.
“While we hope the second half of 2020-21 will herald better economic and business activity in terms of tendering, good liquidity, as well as revival of labour and supply chains, it would be premature to predict the company’s business outcomes," he said in the letter in the FY20 annual report. It pegged the impact of the covid-19 lockdown measures at ₹1,800 crore on revenue and ₹400 crore on net profit.
At its annual general meeting, the company will discuss a resolution to raise ₹4,500 crore through various sources such as qualified institutional placement (QIP).
A report on 7 June by brokerage firm JM Financial said that order inflows in FY21 for L&T are expected to be slow given lower spending expected by Central/State governments ($ 5 billion now vs. $7-8 billion earlier as per L&T’s estimates) and lower inflows from the Middle East on the back of weak oil prices.
“New inflows are expected in roads, railways, water and transmission and distribution. “Although the management has so far said that it does not expect a further deterioration in its working capital (at 24% of sales vs. 20% normalised rate), led by improving receivables, vendor credit and customers sharing a portion of lockdown costs, a change in the working capital cycle for L&T in the June quarter will indicate broader weakness in the Indian economy.