L&T Q3 results: Net profit rises 24% to Rs 2,553 cr, rev beats estimates

Engineering major Larsen & Toubro (L&T) on Monday reported a consolidated net profit of Rs 2,553 crore for the October-December quarter (third quarter, or Q3) of 2022-23 (FY23), up 24.2 per cent from a year ago, aided by exceptional gains of Rs 97 crore due to a profit on the divestment of the mutual fund business.

When adjusted for a one-time charge on the re-measurement of wholesale loan assets of financial services, net profit stands at Rs 2,456 crore — a growth of 20 per cent over the year-ago period.

Bloomberg consensus estimates had pegged L&T’s net profit for Q3 at Rs 2,570 crore, reveals data compiled by BS Research Bureau. 

The company’s revenue from operations in the quarter under review was up 17.3 per cent year-on-year (YoY) to Rs 46,390 crore, aided by strong order inflows and improved execution of projects. This was ahead of Bloomberg consensus estimates, which had pegged revenue for the quarter at Rs 45,850 crore, shows data.

International revenue during the quarter stood at Rs 17,317 crore, constituting 37 per cent of total revenue.

Earnings before interest, tax, depreciation, and amortisation (Ebitda) came in at Rs 5,073 crore, which was below Bloomberg consensus estimates of Rs 5,329 crore. Ebitda margins also contracted 51 basis points from the same period last year to 10.9 per cent in Q3, owing to lower margins reported in information technology (IT) and IT services, said Amit Anwani, research analyst at Mumbai-based brokerage Prabhudas Lilladher.

At the group level, L&T received orders worth Rs 60,710 crore during the quarter, registering a growth of 21 per cent over the year-ago period.

International orders at Rs 15,294 crore during the quarter comprised 25 per cent of the total order inflow, said the company. For the first nine months of FY23, L&T’s order inflows stood at Rs 1.54 trillion, which was a growth of 30 per cent versus the corresponding period last year. Of this, international orders constituted 33 per cent, or Rs 50,478 crore in terms of value.

The strong order inflows reflected in the consolidated order book of the company which stood at Rs 3.86 trillion at the end of the December quarter, which was at an all-time high, growing 14 per cent over the year-ago period, S N Subrahmanyan, chief executive officer and managing director, L&T, said in a statement.

International orders constituted 26 per cent of the consolidated order book.

“We are possibly amidst a synchronous capital expenditure (capex) recovery in India and the Gulf Cooperation Council. With revival of private capex investments, India should witness a multi-year capex cycle in the current decade,” said Subrahmanyan.

In a media call on Monday, L&T’s whole-time director and chief financial officer R Shankar Raman said that key private capex investments in India were likely in sectors such as energy transformation, logistics, industrial park, metal and mining, and data centre.

In Q3, orders were received from sectors such as oil and gas, hydel energy and tunnel, irrigation system, ferrous metal, and power transmission and distribution.

“The government is likely to continue its emphasis on infrastructure spending while providing subtle support to consumption. The production-linked incentive schemes of the government are expected to incentivise private players — both domestic and foreign — to set up manufacturing facilities in an environment of improving demand conditions and business confidence,” said Raman.
 

The infrastructure project segment secured order inflows of Rs 32,530 crore in Q3, registering a growth of 28 per cent versus the year-ago period.

International orders at Rs 2,936 crore constituted 9 per cent of the total order inflow of the segment during the quarter, added the company.

The Ebitda margin of the segment during Q3 came in at 7 per cent vis-à-vis 7.1 per cent recorded in the year-ago period. Margins for the quarter remained stable amidst continuing cost pressures, said Raman.

The energy project segment secured orders valued at Rs 9,051 crore during the quarter that ended December 31, 2022, registering a growth of 12 per cent YoY on receipt of a large domestic offshore oil and gas order in the hydrocarbon business, he said.

During the quarter, L&T Infotech and Mindtree completed their merger and started operating as a merged entity — LTIMindtree. The segment recorded customer revenues of Rs 10,517 crore for Q3, registering a YoY growth of 25 per cent.

On Monday, shares of L&T ended 2.11 per cent lower at Rs 2,114.6 on the BSE. In the past year, shares of the company have risen 6.2 per cent, even as the S&P BSE Sensex increased 2.56 per cent in the same duration.