Engineering and construction major Larsen & Toubro are expected to report more than 10 percent growth in profit, as well as, revenue YoY, with strong order inflow in the quarter ended September 2019.
Profit is likely to be supported by revenue, as well as, corporate tax rate cut while the core infrastructure segment may boost topline growth during the quarter YoY.
Last year there was a one-time gain of Rs 294.8 crore and year-on-year numbers may not be comparable due to acquisition of Mindtree and divestment of electrical & automation business.
According to Motilal Oswal, consolidated revenue is expected to grow at 12.1 percent YoY, while Reliance Securities expects L&T to report revenue growth of 11 percent YoY led by core infra segment.
"Core engineering and construction revenue are expected to grow at 12.4 percent YoY. We expect the infrastructure segment to witness a growth of 13.8 percent YoY, hydrocarbon segment is expected to grow at 26.7 percent helped by strong order book," said Motilal Oswal which expects profit to grow 13.1 percent YoY.
L&T's announced order inflow stood at Rs 36,500 crore in Q2FY20 against Rs 25,000 crore in Q2FY19, led by few large orders including the Navi Mumbai International Airport and hydrocarbon project in Saudi.
Motilal Oswal expects the company to report order inflows of around Rs 41,000 crore, flat YoY, as the company has maintained a good order win run-rate while Prabhudas Lilladher sees order inflow of around Rs 50,000 crore during the quarter, mainly led by infra, power and hydrocarbon segments.
Operating profit is expected to increase in high single-digits but margin may see moderate expansion compared to the same quarter last year.
"We expect the EBITDA margin to expand by 10bp to 11.9 percent. As such, we expect the EBITDA to grow 13.5 percent YoY," Motilal Oswal said.
Key issues to watch out for would be execution trend and outlook on some big-ticket-size orders, and margins in the infrastructure segment as the same has been disappointing for the past few quarters.
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