L&T beats estimates as Q1 net profit surges 45% YoY to Rs 1,702 crore

But sequentially, it declines 53% amid inflationary pressure & Rs depreciation

Engineering major Larsen & Toubro (L&T) on Tuesday reported nearly 45 per cent growth in its consolidated net profit to Rs 1,702.07 crore for the quarter ended June 30, 2022 (Q1). In the year-ago period, net profit came in at Rs 1,174.44 crore. 

This compares favourably with Bloomberg consensus estimates of Rs 1,647 crore for the period. But sequentially, Q1 net profit was down 53 per cent, pointing to inflationary pressure and rupee depreciation woes plaguing the company, sector analysts said.

The company’s consolidated revenue from operations increased 22.22 per cent to Rs 35,853.20 crore during the quarter under review against a Bloomberg consensus estimate of Rs 34,588 crore. Growth was aided by improved construction activity and strong execution across projects, said R Shankar Raman, chief financial officer, L&T, during earnings call on Tuesday.

Sequentially, however, L&T’s revenue declined 32 per cent in Q1 because the April-June quarter is typically weak for infra and engineering companies on account of the monsoon season.

Its profit before interest, depreciation, and taxes (PBIDT) came in at Rs 6,108 crore for Q1, up 13.4 per cent YoY, but down 28 per cent QoQ, the results showed.
 

Despite challenges, the company saw strong traction in order inflows in Q1, Shankar Raman said. It secured orders worth Rs 41,805 crore during the period, up 57 per cent from the year-ago period. Orders from international customers in Q1 stood at Rs 17,842 crore. 

Orders came from a diverse set of businesses, including public infrastructure, water management, minerals, metals, data centres, and hydrocarbons.

As on June 30, 2022, the group's consolidated order book stood at Rs 3.63 trillion, with international orders having a share of 28 per cent, Shankar Raman said.

The infrastructure projects segment registered Rs 14,181 crore in revenues during the quarter, following 36 per cent YoY growth. This growth was aided by improved execution across projects, the CFO said.

The earnings before interest, tax, depreciation, and amortization (Ebitda) margin for this business declined 60 basis points to 6.5 per cent due to cost escalation and change in the revenue matrix, the company said.

Revenue for the energy projects vertical remained almost flat in Q1 at Rs  5,073 crore (there was marginal growth of 3 per cent YoY). The business saw an improvement of 100 bps in its Ebitda margin to 8.5 per cent during the period.

The hi-tech manufacturing business reported revenue worth Rs 1,272 crore, registering 3 per cent YoY growth. It witnessed a sharp decline of 4.1 per cent in the Ebitda margin to 15.1 per cent for the quarter. This was on account of cost provisions on completion of a key project and recognition of customer claims, the company said.

In the IT & technology services segment, L&T posted Rs 9,424 crore as Q1 revenue, registering 30 per cent YoY growth. The Ebitda margin for the segment came in at 22.2 per cent against 22.8 per cent a year ago. Improved operational efficiencies were offset by higher employee costs, Shankar Raman said.

On the BSE, L&T shares closed at Rs 1750.45 apiece, down by Rs 31.45 or 1.76 per cent over the previous day's close. The company's market cap based on Tuesday's close stood at Rs 2.45 trillion.