Notwithstanding the tough business environment both in India and in West Asia, engineering and construction major Larsen & Toubro Ltd. (L&T) has reported a 27% growth in consolidated net profit for the second quarter ended September 30 to ₹1,820 crore from ₹1,435 crore in the same period last year.
The profit included exceptional gains of ₹137 crore which came from disinvestment of a subsidiary, the company said.
Without the exceptional item, net profit rose 63% to ₹1,683 crore.
In the quarter, the company reported a 6% rise in consolidated gross revenue to ₹26,447 crore. This was primarily on account of the headwinds the company faced during ‘this challenging period’, it said.
International revenue in the quarter at ₹9,517 crore constituted 36% of total revenues. The infrastructure segment, which contributes to almost half of total revenues, was impacted by delays in clearances, work front availability and right of way issues. Besides, GST transition challenges impacted execution progress in the quarter, top company officials said.
L&T secured orders worth ₹28,732 crore in the quarter amid a subdued business environment, policy uncertainties and delayed implementation. International orders at ₹10,420 crore constituted 36% of the total order inflow.
Overall, the order inflow was 8% lower than in the same period last year. L&T hopes to meet the last year’s order inflow figure of 1,47,000 crore by the end of this year as against a projection of 12 to 14% growth.
“In the beginning of the year we were very optimistic and the order in take growth projection was based on that. We will meet the last year’s figure or will close slightly above that. Order inflow have been delayed due to delay in decision making in awarding of projects. Too many good reforms by the government are having their impact,” said S.N. Subhramanyan, CEO& MD, L&T.
“As a contractor I am optimistic about the future but on reality check I am cautiously optimistic,” he said.
He said though order intake has gone down, one should not worry as long as the company has healthy order book to execute projects.
Consolidated order book of the group stood at Rs. 257,526 crore as at September 30, 2017, higher by 2% on a y-o-y basis with International Order Book constituting 26% of the total order book. L&T CFO R. Shankar Raman said “the environment continues to be challenging and private investment is yet to pick up. Also there is lot of headwind in the Middle East market. Despite this we are on course to achieve 12% growth in revenue guidance this year.” He said the margins will be 25 basic points more than 10% for this year.