L&T Q2 net rises nearly 16% to Rs996 cr

Engineering and construction major Larsen & Toubro (L&T) has reported a 15.56 per cent year-on-year increase in its consolidated net profit for the fiscal second quarter ended 30 September 2015, at Rs996 crore compared to Rs840 crore in the year-ago quarter.

L&T, however, said that with domestic revenue not showing any pick-up, growth in order inflows could halve to 5-7 per cent and revenue growth would hover around 12 per cent under subdued investment climate.

''The growth in profit was primarily on account of exceptional gains of Rs309 crore due to the disinvestment of L&T's 5 per cent stake in L&T Finance Holdings and sale of stake in one of its vendor's firms,'' R Shankar Raman, chief financial officer, L&T said.

L&T reported a 10.55 per cent increase in net sales to Rs23,393.22 crore in the July-September 2015-16 quarter from Rs21,159.35 crore during the year-ago quarter.

The company's consolidated revenue for the quarter increased by 11 per cent to Rs23,605 crore. International revenue rose to Rs7,658 crore, constituting 32 per cent of the total revenue.

Total expenses rose to Rs21,495.13 crore during the quarter from Rs19,373.65 crore a year-ago.

''There is still capacity under-utilisation and, therefore, no investments are coming in capacity addition. Players are waiting for demand momentum to go up," group chief financial officer R Shankar Raman said.

"Despite efforts taken by the government, investment momentum is yet to pick up and as a result, order inflows are devoid of large investments.

"If you look at the half-year position, we are at Rs55,000 crore in order inflows compared to Rs73,000 crore a year ago. So, we are revising down our order inflow guidance to 5-7  per cent from 15 per cent initially projected as we believe the subdued investment environment to continue for some more time. Last year, order inflows rose 22 per cent to Rs1,55,00 crore.

"Accordingly, we also see a dip in revenue outlook to 10-15 per cent at March-end from our initial projection of 15 per cent for the year," Raman added.

He, however, said there could still be an upswing in order inflows and a few orders could rattle up these numbers in a big way.

He also said the government's efforts to push infrastructure and transport projects, including roads, power transmission etc, could have an impact on the construction and engineering sectors.

"As far as revenue guidance is concerned, fortunately much of it comes from our order backlog so we don't have to win orders for revenues. We've been running around at 10 per cent growth so far this year. Domestic revenues have not shown picked up due to execution challenges. We think we might land up somewhere between 10 and 15 per cent, or may be even 12 per cent," Raman said.

L&T secured fresh orders worth Rs28,620 crore during the quarter out of which international order inflows stood at Rs10,973 crore, constituting 38 per cent of total.

Total order book stood at Rs2,44,097 crore, higher by 14 per cent year-on-year while overseas orders constituted 28 per cent of the total.

L&T's infrastructure segment grew 11 per cent with revenues reaching Rs10,668 crore during the quarter. International sales constituted 30 per cent of total customer revenue of the segment.

During the quarter, the infrastructure segment secured new orders worth Rs16,682 crore.

The power segment recorded revenue of Rs1,404 crore, on the back of higher opening order book, while it secured fresh orders of Rs1,783 crore, up from Rs7,714 crore.

"Projects are being tendered in the power sector, especially after the coal auctions. Since the projects have been bid out after a long time, there is more competition now.

But the price points are challenging," Raman said.

The metallurgical and material handling segment reported revenues of Rs568 crore, while the heavy engineering business recorded sales of Rs630 crore and electrical and automation vertical Rs1,198 crore.

The heavy engineering segment reported revenue of Rs630 crore, down 22 per cent year-on-year mainly on account of delay in receipt of orders, reduced opening order book and slower progress on jobs under execution. International sales constituted 51 per cent of the total customer revenue of the segment.

Its hydrocarbons business grew  7 per cent year-on-year achieving revenue of Rs1,935 crore. International sales constituted 52 per cent of total revenue.

IT&TS segment recorded sales of Rs2,288 crore, while developmental projects division turned in Rs1,351 crore and financial services Rs1,863 crore.

Revenue from other business, including realty, shipbuilding, construction and mining equipment and industrial machinery and products, stood at Rs1,700 crore.