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Our Bureau L&T has reported a satisfactory Q3 on the back of strong execution in a challenging business climate. The company maintained that it will reach its annual revenue guidance for FY20.
Addressing media persons, SN Subrahmanyan, CEO and MD, L&T, said it has been a challenging nine months and the Q3 results need to be seen in the backdrop of the economy growing at an estimated sub-5 per cent. i “It is not good news for us as we have to depend on the investment momentum,” added R Shankar Raman, CFO.
L&T, which has a huge play in infrastructure and other segments, has seen a double whammy over the past nine months — a slowing down in both private and public sector spending. On the infrastructure front, L&T met execution challenges due to a combination of factors. “In the national capital, project work got hit due to pollution for almost two months. Add to that State elections, the challenges faced in projects in AP and Mumbai, and some projects taking more time than normal played a role,” said Shankar Raman.
However, despite these uncertainties, L&T retained its annual guidance at 12-15 per cent growth. “The opportunities have not disappeared and prospects continue to be encouraging,” said Shankar Raman.
For the December quarter, L&T reported profits of ₹2,161 crore, a 13.8 per cent growth over the ₹1,863 crore it posted in the same period last year. This was a miss, as the street had expected profits at around ₹2,404 crore.
Revenues came in at ₹36,717 crore, up 5.43 per cent.
L&T’s order book continued to be strong, with the company bagging ₹41,579 crore in new orders in Q3. Of this, ₹17,901 crore came from international orders, driven by large deal wins in the power transmission and distribution and material handling businesses.
The power segment won a flue gas desulphurisation (FGD) order worth ₹816 crore. The hydrocarbon business clocked revenues of ₹4,386 crore, up 17 per cent. “The hydrocarbon business has been growing well in eight quarters,” said Shankar Raman.
The IT & Tech services business, which includes Mindtree, saw revenues of ₹6,090 crore, but its margins declined to 21 per cent for the December quarter. The infrastructure segment clocked revenues of ₹17,249 crore, a decline of 5 per cent year-on-year. International orders constituted 25 per cent of this business.
L&T’s heavy engineering business also faced pressures in bagging new orders, which came in at ₹497 crore, a 10 per cent YoY decline. However, revenues for this segment grew 20 per cent to ₹723 crore.
The defence engineering segment clocked revenues of ₹1,063 crore, up 6 per cent YoY. Revenues for the financial services segment grew 9 per cent YoY to ₹3,550 crore.
Consolidated EBITDA margins came in at 11.30 per cent, better than what analysts had expected.
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