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L&T has reported revenue growth on the back of fresh orders, even as it said that the private sector investments look subdued in the next 15-18 months.
Addressing reporters on its first quarter performance, SN Subrahmanyan, CEO & MD, said: “Don’t see businesses adding capacity even if they want to. Availability of liquidity is a question,” he said.
While the sentiment in the industry is low, L&T’s results have been good, especially since the management had said in the March-ended quarter that it expects a modest start to the first half of 2019-20.
For the first quarter of 2020 fiscal, L&T reported consolidated profits of ₹1,473 crore — a 21.2-per cent increase compared to the ₹1,215 crore it posted in the same period last year.
Revenues for the quarter grew by 10.2 per centto ₹30,020 crore (₹27,232 crore).
The engineering conglomerate giant, which has interests from infrastructure to software services, bagged new orders worth ₹38,700 crore — a 11-per cent growth. International orders came in at ₹9,005 crore, constituting 23 per cent of the total order flow.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 20.4 per cent to ₹3,319 crore and margin expanded 100 basis points to 11.2 per cent compared to the year-ago period.
Infra, power sectors
The infrastructure segment clocked revenues of ₹18,865 crore posting a 14 per cent year-on-year growth. However, EBITDA margins for the segment went down marginally from 6.8 to 6.4 per cent.
This, Subrahmanyan said, was due to job mix and seasonality of execution.
Power segment bagged orders worth ₹6,700 crore, comprising a domestic order for a 2x660 MW ultra-supercritical thermal power plant in Buxar, Bihar. This resulted in an increase in the order book to ₹12,933 crore.
Despite this heavy order book, the power sector clocked revenues of ₹561 crore — a decrease of 48 per cent on a year-on-year basis.
“We expect sales to pick up from October,” said R Shankar Raman, CFO.
Other segments
The hydrocarbon business recorded revenues of ₹3,763 crore — a 7 per cent yearly growth. Financial services segment clocked revenues of ₹3,462 crore posting a 13 per cent yearly growth driven by favourable outcome of NCLAT order in connection with IL&FS exposure and growth in loan assets.
Heavy engineering segment’s revenues almost doubled to ₹874 crore. “We saw execution momentum in oil and gas, and fertiliser and petrochemical projects,” said Raman.
The IT and Technology Services business saw a 15 per cent growth of revenues to ₹3,819 crore, on the back of all round business from L&T Infotech and L&T Technology Services. Also, in the last three months, L&T has upped its shareholding in Mindtree to 60.59 per cent and is set to announce the new CEO on August 2.
Defence engineering segment registered a 33 per cent raise in revenues to ₹965 crore. This segment bagged orders worth ₹443 crore.
During the quarter, the Competition Commission of India had given the nod for Schneider Electric to buy L&T’s electrical and automation business and the sale is likely to be completed in 12 months This has been classified as discontinued business.
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