The company missed its own 2016-17 target for order inflows and revenue, as a Rs20,000-crore defence order did not come through. L&T, however, said it expects order inflows to grow 12-14% and revenue by 12% in 2017-18, as the deferred orders materialize.
The private sector capex cycle is unlikely to recover this fiscal, group executive chairman A.M. Naik said. “With the current push on recovering of debt, about 90% of private sector today is worried about returning money and not borrowing and promoting new projects, at least in the infrastructure sector,” Naik said.
Consolidated net profit in the quarter rose to Rs3,025 crore from Rs2,335 crore a year earlier. Total income from operations rose 12% to Rs36,828 crore. Nineteen analysts polled by Bloomberg had expected L&T to report a consolidated net profit of Rs2,650.50 crore; 20 analysts had expected net sales of Rs36,582.20 crore.
In January, L&T said it expects 2016-17 orders and revenue to grow 10% each, revising its earlier forecast of 15% growth in order inflow and 12-15% for revenue. However, revenue for the year grew only 8% to Rs1.1 trillion, while order inflows rose just 5% to Rs1.43 trillion.
“Increasingly, for a big company such as L&T, it is a challenge to be dependent entirely on government orders to deliver about 15% order inflow growth. They are being conservative with the new forecast of about 12% growth,” said an analyst at a securities house, asking not to be named.
L&T said it won orders worth Rs47,289 crore in the March quarter, up 9.6% from a year earlier. International orders, at Rs.9,044 crore, made up 19% of the total order inflow.
The consolidated order book stood at Rs2.61 trillion as of 31 March, an increase of 5% from a year earlier.
Revenue from the infrastructure business, its largest unit, rose 8.2% to Rs20,300.96 crore in the quarter. Revenue in the power business fell about 2.8% to Rs1,838.55 crore.
In its outlook for the year, L&T said it expects an economic recovery to steadily improve, backed by structural reforms.The government’s thrust on infrastructure will be a strong driver of economic growth, L&T said.
On Monday, L&T also said it has appointed J.D. Patil to its board as whole-time director and senior executive vice president (defence business) with effect from 1 July. Patil joined L&T in 1978 and was involved in expanding the company’s nascent technology and product development group and the foray in defence sector.
In April, L&T appointed current deputy managing director and president S.N. Subrahmanyan as managing director and chief executive officer, heralding the first change of guard in L&T’s top management in 18 years.
Subrahmanyan, 55, will take on the top job at the complex and diverse conglomerate effective 1 July. Naik, 74, who currently is group executive chairman will be non-executive chairman for three years from 1 October for transition of leadership and to provide guidance and mentorship to the management.
L&T’s shares closed at Rs1,788 on BSE on Monday, little changed from previous closing. Results were announced after market hours.
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