L&T Q3 net profit up 12.6% at Rs2,648 crore despite lower revenue

Revenue for the quarter, however, was down 1.8 per cent at Rs35,596 crore compared with Rs36,424 crore in the same quarter in fiscal 2019-20, despite stronger than expected order inflows. 

L&T reported order inflows of Rs73,233 crore during the quarter. However, the higher net profit for the quarter may also be attributed to higher other income, which rose 127 per cent to Rs1,065 crore against Rs469 crore in the previous year quarter.

EBITDA for the October-December 2020-21 quarter was up 4 per cent at Rs4,280 crore against Rs4,117 crore in the previous year quarter. EBITDA margin also improved to 12 per cent from 11.4 per cent in the year-ago period.

Group performance for the quarter ended 31 December 2020:

• Highest ever orders booked in a quarter, 76 per cent increase y-o-y, on receipt of prestigious and large contracts;

• Order book for April-December period at a record high Rs331,061 crore;

• Revenue for the quarter evidencing return to pre-Covid level;

• 5 per cent increase in PAT y-o-y.

During the quarter the company was awarded the biggest EPC contract in the country and first of its kind - the prestigious High Speed Rail order. With this, the group order inflow for the quarter ended 31 December 2020, rose to Rs73,233 crore, recording a strong growth of 76 per cent over the corresponding quarter of the previous year.

Overseas orders during the quarter constituted 14 per cent of the total order inflow. On a cumulative basis, the order inflow for the nine month period ended 31 December 2020 stood at Rs124,846 crore.

Consolidated order book of the group stood at a record Rs331,061 crore as of 31 December 2020, recording a robust growth of 9 per cent over the March ’20 level. Overseas orders constitute 20 per  ent of the total order book.

Gross revenues of Rs35,596 crore for the quarter ended 31 December 2020, represents a sequential growth of 15 per cent. 

L&T said the Covid-19 restrictions continued to have an impact on project site execution at Hyderabad metro operations that led to a marginal decline in revenue of 2 per cent over the corresponding quarter of the previous fiscal. International revenue during the quarter at Rs12,967 crore constituted 36 per cent of the total revenue. Consolidated gross revenue for the nine month period stood at Rs87,891 crore.

Consolidated profit after tax (PAT) for the quarter ended 31 December 2020, at Rs2,467 crore, showed a growth of 4.9 per cent over the corresponding quarter of the previous financial year. This is largely attributed to higher profit from IT & TS segment and sale of commercial property. 

PAT also includes gain on divestment of Rs209 crore from discontinued operations for the quarter ended 31 December 2020. 

Since the economy is recovering at a better-than-expected pace beginning the fiscal second quarter of FY’21, with the government taking initiatives for enabling demand revival through significant capex ordering in the infrastructure sector, sectors such as Metros/RRTS/HSR, Roads and Expressways, Water, Renewables and Power Transmission & Distribution are witnessing increased traction as far as bidding/tendering activity is concerned, L&T stated in a release.

The government’s renewed thrust on several policy initiatives like ‘Atmanirbhar Bharat’ and ‘Make in India’ has led to improved economic prospects. Various fiscal and monetary stimulus packages announced, including the extension of Production-Linked Incentive (PLI) Scheme to 10 flagship sectors, has positioned India as an alternate hub for global manufacturing, it added.

Also, the company sees the pent-up demand, improved prospects in affordable residential real estate, green shoots in cement and steel capex outlays, as signs of improved confidence on economic revival. However, significant private sector led capex could continue to remain in wait and watch mode, in the medium term.

With India’s economy set for a rebound in FY’22, with successful Covid vaccination drive helping to restore normalcy and kickstart business activity, increased investment in infrastructure, supported by a much awaited economy friendly Union Budget.

On the global front, L&T said, business sentiment remains cautious as localised repeat outbreaks of the Covid-19 virus and the resultant lockdown continues to hamper sustained economic recovery. The near term outlook features continuing uncertainty on the trade front between US and China and forecast of subdued oil prices affecting Middle East economies.

The company sees new project opportunities mostly seen in water, transportation, power transmission and distribution and renewable energy and green fuels.

The prospects for IT & TS segment appear promising with increased opportunities in technology-led outsourcing and digital transformation.