Engineering and infrastructure major, Larsen and Toubro’s (L&T) on Friday beat analyst estimates to report a year-on-year increase of 3% in the net profit to Rs 3,293 crore during the January-March quarter, even as fresh orders remained under pressure. Bloomberg consensus estimates were at nearly Rs 3,043 crore.
The company’s consolidated revenue was up 9% y-o-y at Rs 48,088 crore, in line with the estimates, while the Ebitda (earnings before interest, tax, depreciation and amortisation) surged a good 25% y-o-y to Rs 6,390 crore, much ahead of analyst expectations of Rs 5,516 crore. Consequently, operating margins were up 170 basis points y-o-y to 13.3%.
The order inflow at Rs 50,651 crore was lower by 12% y-o-y due to deferment of awards. Significant orders during the quarter were received in various segments like factories, hydel and tunnel, metros, special bridges, nuclear power, rural water, renewable energy, hydrocarbon offshore, and minerals and metal.
International orders at Rs 18,439 crore made up 36% of the total order inflow, with receipt of biggest Solar PV plant order and transmission line orders. The consolidated order book of the group stood at Rs 3.27 lakh crore as on March 31, 2021, registering a robust growth of 8% over March 31, 2020. International orders constitute 21% of the total order book.
Speaking on the performance, SN Subrahmanyan, CEO and managing director, L&T, said, “Last year was one of the toughest in our company’s history. We are excited about the future for the fact that we have some extraordinary and technologically challenging jobs in our order backlog. However, year ahead has many unknowns. The Covid infection rate, supply chain matters, commodity prices and so on. The company will continue to build and execute on its commitments, but we of course have to calibrate our growth in future based on operating environment and conditions.”
While L&T refrained from giving a firm guidance, R Shankar Raman, chief financial officer, said that the company is estimating that it could close FY22 with a growth that could range anywhere up to low to mid-teens in terms of order inflows and revenues. The company expects margins to remain stable with FY21. However, the company added that if the conditions change materially for the positive or negative, it will apprise the market. L&T did not give a guidance last year stating that the situation as a result of Covid-19 was new and the company did not know what it was staring at.
“We are not hard-coring the guidance. However, we hope that second wave will pass without further damage in a month or two. Assuming that we return to better conditions from second quarter onwards, we are looking ahead to opportunities for the rest of the year with some careful optimism. We also believe that challenges to execution of our large order book of Rs 3.27 lakh crore, will remain in the modest manageable territory,” he said.
Raman also said that the company hopes that the government will persist with their plans for reviving the economic growth through robust investment programmes and accommodative policies, which it continued all through last year with orders coming in water, metros, power transmission, among others.
As for fresh orders coming in from the states, given that a number of them have imposed lockdowns, Subrahmanyan said that even though there could be some postponements and delays, the projects will keep coming and ordering will go on as the situation normalises. Subrahmanyan also said that the company had 2.45 lakh labourers on rolls in March, however, the number has come down to 1.75 lakh now as some have returned again.