Larsen & Toubro: PAT before exceptional items increases by 41%

Larsen & Toubro: PAT before exceptional items increases by 41%

Larsen & Toubro recorded Consolidated Gross Revenue of Rs. 25,011 crore for the quarter ended September 30, 2016, registering an increase of 8.2% on a y-o-y  basis. The International revenue during the quarter at Rs. 8,930 crore constituted 36% of the total revenue. For the half year April-September 2016, the Consolidated Gross Revenue at Rs.46,885 crore recorded a y-o-y increase of 8.6%. The Company continued the momentum of order intake during the second quarter ended September 2016. The consolidated order inflow at Rs. 31,119 crore during the quarter registered a y-o-y increase of 11%. The International orders at Rs. 7,386 crore constituted 24% of the total order inflow. On a cumulative basis, the order inflow for the half-year ended September 30, 2016 stood at Rs. 60,821 crore. Major orders were secured by Infrastructure and Hydrocarbon Segments. Consolidated Order Book of the group stood healthy at Rs. 2,51,773 crore as on September 30, 2016, higher by 4% on a y-o-y basis. International Order Book constituted 29% of the total Order Book.

Consolidated Profit After Tax (PAT) before exceptional items for the quarter ended September 30, 2016 at Rs. 1,032 crore was higher by 41% y-o-y. As a part of implementation of its Startegic Plan, the Company has divested the General Insurance business. Inclusive of the gain on divestment, the Company recorded overall PAT for the quarter ended September 30, 2016 at Rs. 1435 crore vis-à-vis PAT of Rs. 778 crore for the corresponding quarter of the previous year. For the half-year ended September 30, 2016, the overall PAT was Rs. 2.044 crore as compared to Rs. 1,197 crore recorded for the corresponding period of the previous year.
 
Infrastructure Segment
 
Infrastructure Segment achieved customer revenue of Rs. 11,332 crore for the quarter ended September 30, 2016 registering a y-o-y growth of 6%. Delays in customer clearances impacted progress of a few jobs under execution during the quarter. Transportation Infrastructure and Heavy Civil Infrastructure contributed to the revenue growth during the quarter. International revenue constituted 33% of the total customer revenue of the segment.
 
Infrastructure segment won fresh orders of Rs. 18,872 crore during the quarter ended September 30, 2016, despite muted investment climate. The order inflow during the quarter was contributed by Transportation Infrastructure, Power Transmission & Distribution and Heavy Civil Infrastructure. International orders contributed to around 17% of the total order inflow of the segment during the quarter.
 
The Order Book of the Segment grew 6% on a y-o-y basis and stood at Rs. 1,86,731 crore as on September 30, 2016. 
 
The segment recorded EBIDTA margin at 7.1% during the quarter ended September 30, 2016 vis-à-vis 9.3% recorded in the corresponding quarter of the previous year. The margin during the quarter was impacted due to extended stay and delayed approvals, leading to cost increases in some of the contracts under execution.
 
Power Segment
 
Power Segment recorded customer revenue of Rs. 1,745 crore during the quarter ended September 30, 2016, registering a growth of 30% over the corresponding quarter of the previous year on progress of projects under execution. International revenue constituted 27% of the total customer revenue of the segment during the quarter. Power Segment secured fresh orders of Rs. 2,056 crore for the quarter ended September 30, 2016, which included a large domestic order secured by a joint venture company, as against Rs. 1,846 crore in the corresponding quarter of the previous year. 
 
The Order Book of the Segment stood at Rs. 17,168 crore as on September 30, 2016.
 
The segment EBIDTA margin for the quarter ended September 30, 2016 was lower at 3.0% vis-à-vis 5.0% recorded in the corresponding quarter of the previous year, on account of the job mix and stages of execution during the quarter.
 
Heavy Engineering Segment
 
Heavy Engineering Segment achieved customer revenue of Rs.755 crore registering a growth of 24% over the corresponding quarter of the previous year. International Revenue constituted 34% of the total customer revenue of the segment. Heavy Engineering Segment secured fresh orders valued Rs. 547 crore during the quarter ended September 30, 2016, recording a decline of 10% on y-o-y basis. International orders constituted 54% of the total order inflow of the segment during the quarter. The Order Book of the Segment stood at Rs. 7,737 crore as on September 30, 2016. The EBIDTA margin of the segment improved to 14.6% for the quarter ended September 30, 2016 on the back of execution progress vis-à-vis the operating loss of 12.6% recorded in the corresponding quarter of the previous year. 
 
Electrical & Automation (E&A) Segment
 
E&A Segment recorded customer revenue of Rs. 1,142 crore during the quarter ended September 30, 2016, registering a y-o-y decline of 4%. International Revenue constituted 28% of the total customer revenue of the segment for the quarter ended September 30, 2016. The EBIDTA margin of the E&A Segment strengthened to 15.0% for the quarter ended September 30, 2016, recording an increase over 14.1% earned during the corresponding quarter of the previous year driven by favourable product mix. The Order Book of the Segment registered a y-o-y decline of 4% and stood at Rs. 3,032 crore as on September 30, 2016.
 
Hydrocarbon Segment
 
Hydrocarbon Segment achieved customer revenue of Rs. 2,494 crore for the quarter ended September 30, 2016, registering a y-o-y growth of 33% over the corresponding period of the previous year. International revenue constituted 52% of the total customer revenue of the segment for the quarter ended September 30, 2016. Hydrocarbon Segment secured fresh orders valued Rs 663 crore during the quarter ended September 30, 2016, taking the total order intake for the half year ended September 30, 2016 to Rs. 8,611 crore, higher by 91% on y-o-y basis. International orders during half year ended September 30, 2016 constituted 81% of the total order inflow of the segment. The Order Book of the Segment registered a y-o-y growth of 39% and stood at Rs. 20146 crore as on September 30, 2016. Hydrocarbon segment recorded significant improvement in the EBIDTA margin at 7.1% for the quarter April to September 2016 vis-à-vis 1.4% recorded in the corresponding quarter of the previous year with the progress of the jobs under execution and close out of legacy contracts.
 
IT & Technology Services (IT&TS) Segment
 
IT & Technology Services Segment achieved customer revenue of Rs. 2,440 crore during the quarter ended September 30, 2016, registering a y-o-y growth of 9%. International Revenue constituted 95% of the total customer revenue of the segment for the quarter ended September 30, 2016. The EBIDTA margin of the IT&TS Segment at 21.0% for the quarter ended September 30, 2016 was higher vis-à-vis 19.9% for the corresponding quarter of the
previous year, on the back of better manpower utilization and marketing cost optimisation.
 
Developmental Projects Segment
 
Developmental Projects Segment registered customer revenue of Rs. 963 crore during the quarter ended September 30, 2016, vis-à-vis Rs. 1,024 crore recorded in the corresponding quarter of the previous year. The EBIDTA margin of the Developmental Projects Segment for the quarter ended September 30, 2016 stood at 12.6% vis-à-vis 4.3% earned during the corresponding quarter of the previous year.
 
Financial Services Segment
 
Financial Services Segment recorded customer revenue of Rs. 2,140 crore during the quarter ended September 30, 2016, registering a y-o-y growth of 13%, driven by growth in loan assets and disbursements in the focus areas of retail and wholesale finance business. The operating margin of the Financial Services Segment for the quarter ended September 30, 2016 at 18.5% increased over 17.9% earned during the corresponding
quarter of the previous year.
 
“Others” Segment
 
“Others” segment comprises Metallurgical & Material Handling Systems, Realty, Shipbuilding, Construction & Mining Equipment and Industrial Machinery & Product businesses. Customer Revenue of “Others” Segment during the quarter ended September 30, 2016 at Rs. 1,999 crore registered a decrease of 11% over the corresponding quarter of the previous year on the back of weak demand. International Revenue constituted 26% of the total customer revenue of the segment. The segment margin for the quarter declined to 6.5% as compared to margin of 14.6% earned in the corresponding quarter of the previous year due to inventory write-down in Shipbuilding business.
 
Outlook
 
The government has been stressing on its commitment to implement policies and programmes for infrastructure development with special focus on development of transportation corridors, metro rails, smart cities and water resources. There has been emphasis on domestic defence manufacturing as well. Significant changes in the form of introduction of GST and passage of bankruptcy code are being ushered. Various policy measures to facilitate ease of doing business, expansion of hi-tech manufacturing base and attracting foreign investments need to be implemented well to revive investments and sustain economic growth in the long run. 
 
The Company has integrated range of comprehensive offerings in its various operating segments and is implementing its Strategic Plan of profitable growth and higher Return on Equity. On the international front, the Company continues to strengthen its position and pursue select prospects in the core infrastructure and energy sector. The Company is well placed to benefit from the emerging opportunities and sustain its leadership position across the sectors.
 
 
 

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