L&T will stick to FY19 guidance, says studying options after SEBI denies buyback

Larsen & Toubro (L&T) said that it will be able to stick to FY19 guidance, but expects the last quarter and the subsequent first quarter of FY20 to be a dull period for fresh order inflow due to general elections.

The country’s largest infrastructure company had earlier said that it was expecting a 12-15 percent increase in revenue and 10-12 percent increase in order inflows in the current fiscal. EBITDA (earnings before interest, tax, depreciation and amortisation) margins are expected to remain stable with an upward bias of 25 basis points.

L&T will stick to FY19 guidance, says studying options after SEBI denies buyback

In the nine months ended December, it surpassed its guidance. Revenues rose 22 percent, order inflows grew at 16 percent and EBITDA margin stood at 11.1 percent, 70 basis points above the same period as compared to the previous year.

L&T on January 25, beat street estimates and reported strong earnings for the quarter ended December 2018 as profit grew by 37 percent year-on-year to Rs 2,042 crore, driven by strong revenue growth and operational performance.

Revenue from operations in Q3 increased by 24.2 percent to Rs 35,708.9 crore.

At the group level, L&T secured orders worth Rs 42,233 crore for the quarter ended December 2018, down 12 percent as compared to Rs 48,130 crore reported in same period last year. It however remained steady against the Rs 42,000 crore orders received in the September quarter.

Its infrastructure segment’s contribution to the order inflow stood at around 50 percent.

The company said there were delays in order awards in the current quarter due to deferment of select prospects in project businesses mainly in transportation infrastructure, heavy civil infrastructure and power business.

SEBI’s buyback rejection

On the market regulator Securities Exchange Board of India’s (SEBI) rejection of the proposed Rs 9,000 crore share buyback, L&T said it was evaluating options to reward shareholders.

“It’s a bit of a harsh order, we are studying it,” said SN Subrahmanyan, Chief Executive Officer and Managing Director of L&T.

“There seems to be an internal rule of SEBI, which looks at the consolidated debt of group companies when it comes to the buyback, they seem to have applied that in our case, this was not in the public domain and we are not aware of it. That’s how the rejection took place,” Subrahmanyan added.

L&T had proposed to buy back up to 6.1 crore shares from shareholders at Rs 1,475 per equity share.

Subrahmanyan added the company will take up the matter with SEBI.

source: moneycontrol


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