L&T net up 4% at ₹2,858 cr in Q3 on better IT service business, asset sale

Larsen and Toubro, one of the largest infrastructure companies, reported a four per cent rise in net profit in the December quarter at ₹2,858 crore, against ₹2,752 crore logged in the same period last year, largely due to better performance of IT and technology services business and sale of commercial property.

Revenue from operations were up two per cent at ₹35,596 crore (₹36,243 crore).

The profit was also boosted by inflow of ₹209 crore from sale of discontinued operations during the quarter. The company sold the electrical and automation business to Schneider Electric SE and the UK-based marine control IT automation systems subsidiary to Rolls-Royce Power Systems AG.

SN Subrahmanyan, Managing Director, L&T, said the overall order book of the company hits a new high of ₹3.31 lakh crore, but the sharp rise in steel and cement prices remains a concern.

Govt, public sector orders

About 90 per cent orders bagged in the December quarter were from the government and public sector companies with strong backing for funding from multi-lateral agencies. Some of the good things that have happened during the pandemic is that a lot of disputes over payments are getting settled, government agencies have reduced the bank guarantee required to 3 per cent from 5 per cent and advances are being paid without interest, he said. All these developments have reduced the working capital requirements and the March quarter is expected to much better as the company is the lowest bidder in projects worth another ₹27,000 crore, he added.

Upskilling workforce

The company has managed to mobilise workers at the contract site to the pre-Covid levels, he said. L&T may take about two quarters to realign and upskill force to match the pre-Covid days, Subrahmanyan added.

R Shankar Raman, CFO, L&T, said the quarter under review can be termed as big turnaround for the industry with better mobility of people, goods and services, rise in pent up and incremental demand, increased energy consumption and turnaround in overall economic and industrial activity.

While the excess liquidity in the system is driving up the market and pushing up asset prices, the industry has to be cautious that it does not create economic bubble, he added.