Mumbai: Larsen & Toubro Ltd, India’s largest engineering and construction company, reported on Saturday a lower-than-expected third quarter profit.
Net profit in the December quarter rose 38.86% to Rs972.47 crore from Rs700.34 crore. Revenue from operations rose 1.4% to Rs26, 286.98 crore from Rs25,928.07 crore. Twenty analysts polled by Bloomberg had expected L&T to report profit of Rs1,083.50 crore while 21 analysts had expected net sales of Rs27,616.20 crore.
“We have done very well on cost management and profitability position of the company but not been coping up adequately with the headwinds that are blowing in terms of execution. Also the environment for order wins has been pretty challenging,” said R. Shankar Raman, chief financial officer, L&T.
L&T revised its full-year fiscal 2017 forecast to 10% for growth in order inflow as well as revenue. Till last quarter the company had provided a guidance of 15% growth in order inflow and between 12% and 15% growth in revenue.
“The government outlay on large projects continues to be elusive as the projects are announced with a considerable delay and post announcement we do find the award timelines extending. Given this background, we think the company has done well,” added Raman.
Other Income rose 6.56% to Rs256.83 crore in the December quarter from Rs241.03 crore for the same quarter last year. Consumption of raw materials dropped 9.05% to Rs3,843.30 crore for the quarter from Rs4,225.64 crore for the same quarter last year.
L&T said it won orders worth Rs34,885 crore in the quarter ended 31 December. International orders at Rs11,865 crore made up 34% of the total order inflow. It won major orders from the infrastructure and hydrocarbon sectors.
Infrastructure segment achieved a growth of 6% on a year-on-year basis to Rs12,467 crore and the hydrocarbon segment registered a growth of 14% to Rs2,638 crore on a y-o-y basis. International revenue constituted 37% and 52%,respectively, of the total customer revenue of the segment for the quarter ended 31 December 2016. L&T’s consolidated order book stood at Rs2.59 trillion as of 31 December, an increase of 1.4% from a year earlier, with international orders constituting 29% of the total.
L&T’s shares lost 0.68% to close at Rs1,439.65 per share on Friday on the BSE, while the benchmark index Sensex gained 0.63% to close at 27,882.46 points.
Domestic growth appears to take longer time as investment momentum remains weak and the banking system is burden by debt overhang. Government’s initiatives to curb the parallel economy and make a transition to cashless economy has caused disruption whose impact on the business sentiment is yet to be conclusively assessed. The challenging business conditions are expected to continue in the next few quarters until the government moves to lift growth through infra spend and tax reforms take effect.