Infrastructure and engineering major Larsen and Toubro 's (L&T) fourth quarter earnings beat analysts' expectations on all counts. Consolidated profit rose 18.6 percent to Rs 2,454 crore compared to year-ago period, driven by strong revenue and operational performance despite higher finance and tax cost.
Revenue increased 18.3 percent to Rs 33,157 crore on the back of good progress in project execution and more than 50 percent of revenue was contributed by infrastructure segment. With this the company achieved its full year topline guidance that was expected at 10-15 percent. Revenue in FY16 rose 11.55 percent to Rs 1,02,631.7 lakh crore against Rs 92,004.6 crore in preceding year and profit grew by 6.8 percent to Rs 5,090.5 crore.
The only disappointment was that the company's order inflow growth during the year fell short of expectations. It has garnered fresh orders worth Rs 1,36,858 crore in FY16, including international orders of Rs 43,956 crore, against guidance of Rs 1.55 lakh crore. In Q4, it has received orders of Rs 43,334 crore. Consolidated orderbook of the group stood at Rs 2,49,949 crore as of March 2016, higher by 7 percent YoY. For FY17, L&T expects revenue to grow at 12-15 percent and order inflow at 15 percent over FY16.
While addressing press conference, R Shankar Raman (whole-time director & chief financial officer, L&T) said the company is confident of growth in near to medium term and will be focusing on profitable execution. He further said growth momentum in infra segment rests mainly on government initiatives in core infra while private sector capex may take time to revive as investment sentiment is weak.
Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) shot up 35.2 percent to Rs 4,859 crore and margin expanded by 190 basis points to 14.7 percent compared to year-ago period. According to average of estimates of analysts' polled by CNBC-TV18, profit was expected at Rs 2,030 crore on revenue of Rs 31,429 crore for the quarter.
Operating profit was estimated at Rs 4,117 crore and margin at 13.1 percent in Q4. Speaking to CNBC-TV18, Gaurang Shah, VP, Geojit BNP Paribas, said though the company has a strong orderbook, it also needs to execute the same effectively. Also, the company will be a beneficiary of the new Capital Goods Policy.
L&T has an exceptional gain of Rs 48.52 crore during the quarter (against Rs 98.42 crore YoY) on sale of foundry business unit. For the year, exceptional gain stood at Rs 358.10 crore against Rs 347.7 crore in preceding year, including gain of Rs 309.58 crore on sale of part stake in subsidiary company & associate firm. Infrastructure business registered revenue growth of 19 percent at Rs 18,655 crore with EBIT (earnings before interest & tax) rising 49.8 percent. Power business grew by 51 percent to Rs 2,185 crore with EBIT increasing 41 percent. Revenue from its heavy engineering business increased 5 percent to Rs 1,072 crore with EBIT loss of Rs 23.4 crore (against EBIT profit of Rs 81.6 crore YoY). Electrical & automation revenue declined 8.4 percent to Rs 1,599 crore with EBIT falling 11.2 percent YoY.
Hydrocarbon business grew by 11.3 percent to Rs 2,487.5 crore with EBIT loss of Rs 92 crore (against loss of Rs 209.2 crore YoY). Revenue from IT & tech business increased 16 percent to Rs 2,363 crore with EBIT climbing 12 percent and financial services revenue rose 19 percent to Rs 1,996 crore with EBIT flat at Rs 211 crore. Other income declined 24.7 percent to Rs 218.2 crore while tax expenses increased 24.5 percent to Rs 953.7 crore and finance cost jumped 65 percent to Rs 773.7 crore compared to year-ago period. L&T said the board of directors has recommended a dividend of Rs 18.25 per share. The scrip of L&T, which announced earnings after market hours, closed up 4 percent at Rs 1,291.30 on BSE.
source: moneycontrol.com
