Engineering conglomerate Larsen & Toubro (L&T) reported a 5 per cent decline in profit before tax (PBT) for the December 2019 ended quarter on account of lower disbursals and profits for its financial services arm.
Post tax, the company reported a consolidated profit of Rs 2,353 crore, a jump of 15 per cent. While infrastructure segment revenue for the company took a hit, overall order inflow grew at a slower pace of 2 per cent. However, the management maintained its order and revenue guidance for the full year.
For the quarter which ended on December 2019, L&T PBT was at Rs 3,223.23 crore, compared to Rs 3,401.22 crore reported durig corresponding period a year ago. Consolidated gross revenue for the same period was at Rs 36,243 crore, a growth of 6 per cent year-on-year. The company missed streets estimates. In a Bloomberg poll, 17 analysts estimated revenue at Rs 39368 crore and 11 analysts estimated net profit at Rs 2,404 crore.
“It has been a challenging quarter and nine month period. It is well known, well commented and well accepted now that economic growth has slowed down. However, there are opportunities, some have been deferred, we see these are opportunities deferred and not opportunities lost,” said Shankar Raman, whole time director and chief financial officer (CFO) for L&T. He added, economic reforms in the country are now moving from the back burner to the front burner.
Raman added, “The government needs to deal with some structural issues, within a year or year and half the cycle should reverse.” Total order inflow for the company grew at 2 per cent to Rs 41,579 crore, largely helped by growth in international orders. The company’s outstanding order book was at Rs 3.06 trillion as of December 2019. The company maintained its full year guidance of 10 to 12 percent growth in order inflow for the full year.
On the upcoming budget, company officials added, the budget will act as an enabler but not a game changer for the next 12 months. The National infrastructure Pipeline (NIP) plans Rs 102 trillion investment in the next five years. Company officials added they will look for financing details for the planned NIP.
Segment wise, L&T’s infrastructure business revenue witness a decline of 5 per cent. In terms of orders, company officials said there are concerned on the pre determined budget of projects and lack of competition. SN Subrahmanyan, managing director and chief executive officer for the company said, there are order where L&T is the single bidder and needs to bid multiple times, to win the award. In certain other orders, he added, L&T’s bid has been higher than what the government has budgeted for the projects.
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