L&T shares clock biggest ever single-day gain

Seetharaman R BL Research Bureau | Updated on January 20, 2018 Published on May 26, 2016


Better-than-expected performance in Q4, strong FY17 guidance lift sentiments

Shares of engineering major L&T clocked its highest single-day gain since 2011. The stock closed with a gain of 14.04 per cent on the BSE on Thursday.

The results were announced on Wednesday.

The healthy performance during the March quarter --- ahead of most analysts’ expectations — saw the company end the fiscal 2016 on an optimistic note.

Total income from operations and net profit grew 11.5 per cent and 7 per cent to Rs 1,02,631 crore and Rs 5,091 crore, respectively in FY16 when compared to FY15. Profit before interest, tax and depreciation stood at about Rs 12,342 crore in FY16, 12 per cent higher than FY15.

Infrastructure segment

Infrastructure segment that constituted over half (54 per cent) of the company’s revenue in FY16 showed a healthy growth of 12.3 per cent. The growth in profit before tax for infrastructure segment was a strong 24 per cent in FY16 over the previous fiscal.

Increased orders from transportation infrastructure, power transmission & distribution and water business helped. But, delayed clearances, slow bureaucratic processes and increased receivables remain a problem.

Besides, profit before tax for the IT & technology services increased 29 per cent to Rs 1,698 crore. Hydrocarbon segment was able to pare its loss (incurred in FY15) to some extent. This can be attributed to completion of legacy projects in West Asia and loss minimisation of international projects.

Heavy engineering segment, on the other hand, ended FY16 with a loss of Rs 192 crore compared to a profit of Rs 227 crore (before tax ) in FY15. Depleting order book, under recovery and cost provisions lead to a loss in margin.

Order book

Despite a drop in order inflow to Rs 1.36 lakh crore in FY16 compared with Rs 1.55 lakh crore in FY15, the current order book at Rs 2.5 lakh crore indicates a healthy revenue visibility for the next two years or so.

For FY16, international orders constituted 32 per cent of the total order inflow, while 62 per cent of the total order inflow was from the infrastructure segment.

The company is optimistic about the increased Government spending budgeted for infrastructure projects. This should transform into a strong order inflow in roads, railways and power segment for the company in the upcoming quarters.

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Published on May 26, 2016
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