On Friday, engineering and infrastructure major Larsen and Toubro’s (L&T) beat analyst estimates to report a year-on-year increase of 3% in the net profit to Rs 3,293 crore during the January-March quarter as fresh orders remained under pressure. Bloomberg consensus estimates were at nearly Rs 3,043 crore. While L&T refrained from giving firm guidance, R Shankar Raman, chief financial officer, said that the company is estimating that it could close FY22 with a growth ranging from low to mid-teens of order inflows and revenues.
According to the estimates, the company’s consolidated revenue was up 9% y-o-y at Rs 48,088 crore. At the same time, the Ebitda (earnings before interest, tax, depreciation, and amortization) surged an excellent 25% y-o-y to Rs 6,390 crore, much ahead of analyst expectations of Rs 5,516 crore. Consequently, operating margins were up 170 basis points y-o-y to 13.3%.
The order inflow at Rs 50,651 crore was lower by 12% y-o-y due to the postponement of awards. Significant orders during the quarter were received in various segments like factories, hydel and tunnels, metros, unique bridges, nuclear power, rural water, renewable energy, hydrocarbon offshore, and minerals and metal.
The consolidated order book of the group stood at Rs 3.27 lakh crore as of March 31, 2021, registering a robust growth of 8% over March 31, 2020. International orders at Rs 18,439 crore comprised 36% of the total order inflow, receiving the most significant Solar PV plant and transmission line orders. International orders constitute 21% of the whole order book.
Speaking on the performance, SN Subrahmanyan, CEO and managing director of L&T, said, “Last year was one of the toughest in our company’s history. We are excited about the future because our order backlog has some extraordinary and technologically challenging jobs. However, the year ahead has many unknowns. The Covid infection rate, supply chain matters, commodity prices, etc. The company will continue to build and execute on its commitments, but we, of course, have to calibrate our growth in the future based on operating environment and conditions.”
While L&T refrained from giving firm guidance, R Shankar Raman, chief financial officer, said that the company is estimating that it could close FY22 with a growth that could range from low to mid-teens in terms of order inflows and revenues. The company expects margins to remain stable in FY21. However, the company added that it will appraise the market if the conditions change materially for the positive or negative. L&T did not give guidance last year, stating that the situation resulting from Covid-19 was new and the company did not know what it was staring at.
“We are not hard-coring the guidance. However, we hope the second wave will pass without further damage in a month or two. Assuming we return to better conditions from the second quarter onwards, we are looking ahead to opportunities for the rest of the year with careful optimism. We also believe that challenges to the execution of our large order book of Rs 3.27 lakh crore will remain in the modest, manageable territory,” he said.
Raman also said the company hopes the government will persist with its plans to revive economic growth through robust investment programs and accommodative policies. It continued last year with orders in water, metros, power transmission, etc.
As for fresh orders coming in from the states, given that many of them have imposed lockdowns, Subrahmanyan said that despite some postponements and delays, the projects will keep coming. Orders will go on as the situation normalizes. Subrahmanyan also noted that the company had 2.45 lakh laborers on rolls in March. However, the number has come down to 1.75 as some have returned.
