L&T Q3 profit results: 4.9% growth due to highest ever orders

Larsen & Toubro, the engineering and manufacturing conglomerate, on 25th January, 2021 declared a 4.9% growth in Q3FY21 consolidated profit at Rs 2,467 crore as they received the most reputable clients and highest orders in a quarter. The bottomline was ahead of CNBC-TV18 poll estimates which stood at Rs 2,110 crore for the quarter.

This profit growth was primarily owed to higher profit from IT a TS segment and sale of commercial property in realty. PAT also included earnings on disinvestment of Rs 209 crore from discontinued operations for the quarter concluded December 2020, towards further adjustments resulted against the sale of electrical and automation business to Schneider Electric SE and sale of the UK based Marine control and automation systems subsidiary to Rolls-Royce Power Systems AG, reported by L&T.

During the quarter, the company gained the biggest EPC contract in the country and first of its kind – the prestigious High Speed Rail order.

In its BSE filing, the company quoted , “the L&T Group order inflow for the quarter ended December 2020 registered a strong growth of 76 percent over the corresponding quarter of the previous year and stood at Rs 73,233 crore.”

International orders during the quarter constituted 14% of the total order inflow. On a progressive basis, “the order inflow for the nine months period ended December 2020 stood at Rs 1,24,846 crore,” said L&T.

The consolidated order book of the company held a record of Rs 3,31,061 crore in December 2020, registering a vigorous increase of 9% over the March 2020 level.

Consolidated revenue from operations stood at Rs 35,596.4 crore for the quarter ended December 2020 fell by 1.8% year-on-year, falling short of CNBC-TV18 poll estimates which was fixed at Rs 37,309 crore.

“The COVID-19 restrictions continued to have an impact on project site execution and Hyderabad metro operations that led to a marginal decline in revenue of 2 percent over the corresponding quarter of the previous year,” L&T said.

At the operating level, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 3.9% to Rs 4,279.8 crore and margin expanded 60 bps YoY to 12% in the Q3 December 2020, which both were better than poll estimates of Rs 4,163 crore and 11.2 percent respectively.

Infrastructure business, which contributed 45% to total revenue, fell by 7 percent to Rs 15,973.2 crore with its earnings before interest and tax (EBIT) declining 6.5% but margin rose by 3 bps compared to corresponding period.

Revenue from its hydrocarbon business progressed by 0.7% year-on-year to Rs 4,422 crore with its EBIT unchanged at Rs 493 crore, while defense engineering business reported a 2% YoY growth at Rs 1,024 crore with EBIT reducing 20.7% in Q3FY21.

Heavy engineering division revenue fell by 0.4% to Rs 803.4 crore in Q3FY21 with EBIT declining 15.1 percent. On the other hand, power business reported a 29.4% YoY rise at Rs 903.7 crore with its EBIT down 37.1 percent in the quarter concluded December 2020.

The L&T stock has produced a robust return of over 50% since the beginning of October last year, better than the BSE Capital Goods index (up 45%) and BSE India Infrastructure (up 36%) in same period.

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