L&T Q3 consolidated net profit rises 15% at Rs 2,560 cr; total income up 5% to Rs 36,718 cr

New Delhi: Notwithstanding the challenges in project execution in the domestic market, engineering major Larsen & Toubro (L&T) on Wednesday reported a 15 percent rise in its consolidated net profit at Rs 2,560.32 crore for the quarter to December 2019, helped by higher revenues from international contracts. The company had reported a consolidated profit after tax of Rs 2,218.68 crore in the same period a year ago. Its consolidated total income during October-December increased to Rs 36,717.60 crore, against Rs 34,823.08 crore in Q3 FY19. “The revenues have increased largely on the back of execution of orders bagged in the hydrocarbon segment in the international market. Also, the exports of our goods and services in the IT&TS (information technology and technology services) business have contributed to the rise in revenues. Infrastructure business, on the other hand, faced a lot of challenges, impacting the quarterly revenues,” Group chief financial officer R Shankar Raman told reporters. [caption id=“attachment_4822891” align=“alignleft” width=“380”] L&T logo. Image courtesy - Company.[/caption] He further said that the sector has faced challenges due to change in government in Maharashtra and Andhra Pradesh and few PILs regarding major projects have affected the pace of order execution. “While the order intake in the infrastructure segment have improved significantly, change of governments has led to the stoppage of work. Lower fund allocation in some states adversely impacted the execution process.”  “Besides, several PILs have also affected project execution. Also, the pollution in Delhi prevented construction activities for many days impacting execution, thus resulting in a decline in revenues from the infrastructure segment,” Raman said. He also noted that most of these issues are now getting behind and the company will be back on a growth trajectory in the subsequent quarters. L&T won new orders worth Rs 41,579 crore during the quarter amid subdued business environment, taking total consolidated order book to Rs 3.06 lakh crore as of 31 December, 2019. “We are well on track to meet our full-year order inflow growth guidance of 10-12 percent and we are maintaining revenue growth forecast at 12-15 percent,” Raman said. He noted that economic growth has slowed down considerably to about sub 5 percent which is not a good news for construction companies. “Construction companies like us, we depend on investment and investment momentum and economic growth slowing down is not a good news for us. But having said that, the good part of the situation is that the opportunities have not disappeared and the prospect and potential of the company continues to be encouraging,” Raman said. He said that though there have been deferment of programmes and projects, these are opportunities deferred and not lost. “Order inflows are robust despite deferrals in order booking and we have revenue visibility for the next 2-2.5 years,” Raman added. International orders during the quarter at Rs 17,901 crore increased to 43 percent of the total order inflow, on large value order wins in power transmission and distribution and metallurgical and material handling business. The consolidated order book of the group stood at Rs 3,06,280 crore as on 31 December, 2019, registering a reasonably high growth of 5 percent over March 2019. On the segment-wise performance, the power business reported revenues of Rs 694 crore during the quarter registering a Y-o-Y decrease of 23 percent on a depleted opening order book and the new awards yet to pick up execution momentum. The segment secured orders of Rs 816 crore for the quarter on receipt of an order for flue gas desulphurisation (FGD). “Power segment continues to have mix fortune with large contracts are elusive. The segment bagged good orders initially but since the order book was soft last year, there has been a decline in revenue. We hope to bag more orders in the coming period,” Raman added. Revenue from its heavy engineering business increased 16.4 percent year-on-year to Rs 806 crore, with opening order book gaining execution momentum. Its EBIT grew by 51.6 percent Y-o-Y to Rs 159 crore and margin surged 460 bps Y-o-Y to 19.7 percent for the quarter. L&T reported a 1.9 percent Y-o-Y growth in defence engineering business at Rs 1,064.7 crore for the quarter led by noteworthy progress in the execution of a marquee order for tracked artillery guns. Hydrocarbon segment registered a 16.3 percent Y-o-Y rise in revenue at Rs 4,392.6 crore on strong execution momentum in onshore vertical.