L&T Q4 net profit drops marginally but beats Street estimates: Key takeaways

Mumbai: Engineering and construction firm Larsen & Toubro (L&T) reported a 4.4 per cent drop in its consolidated net profit for the quarter ended March at Rs 3,430.1 crore, but still beat Street view.

In the same quarter a year ago, it had reported a consolidated net profit of Rs 3,586.48 crore in the same quarter a year ago. An ET Now poll had pegged the net profit at Rs 2,997 crore.

Of this, the net profit attributable to the owners of the company came in at Rs 3,197.07 crore, compared with Rs 3,418.24 crore a year ago.

The company said that while the initial quarters of FY 2020-21 are expected to be adversely affected by the current upheaval, it expects growth revival in the later part of the financial year.

Its consolidated revenues in the quarter rose to Rs 44,905.76 crore, from Rs 43,914.37 crore a year ago.

Here are the key takeaways of L&T’s Q4 report card:
Outlook: L&T pointed out that the Indian economy has been struck by the coronavirus pandemic at a time when some green shoots of economic recovery were being forecasted after a prolonged bout of growth slowdown.

The lockdown imposed towards the end of FY 2019-20, in an attempt to prevent community transmission of the virus, has unfortunately led to both demand and supply shocks to the economy, it added.

“Against this backdrop of domestic challenges and global volatility and the uncertainty about timelines by which normalcy will be restored, the company has taken a number of measures designed to weather the economic crisis,” L&T said.

“While the initial quarters of FY 2020-21 are expected to be adversely affected by the current upheaval, we expect growth revival in the later part of the financial year assuming things get better from here,” it added.

Dividend: The company recommended a final dividend of Rs 8 per equity share, apart from the interim dividend of Rs 10 per share which was declared earlier.

Orders rise: The order inflow for the quarter ended March 31 stood at Rs 57,785 crore, registering a growth of 5 per cent over the corresponding period of the previous year, with significant orders received in the infrastructure segment.

Order book swells: The consolidated order book of the group stood at Rs 303,857 crore as on March 31, 2020, registering a growth of 4 per cent over March, 2019. International orders constitute 25 per cent of the total order book.

Infrastructure segment: During the quarter, the segment recorded an order inflow of Rs 41,396 crore, registering a growth of 33 per cent over the corresponding quarter of the previous year. For the quarter ended March, the customer revenue was at Rs 25,332 crore, recording year-on-year (YoY) decline of 6 per cent, primarily due to slowdown caused by Covid-19 environment.

Power segment: The segment recorded order inflow of Rs 218 crore for the quarter ended March mainly comprising order amendments.

Heavy Engineering Segment: For the quarter January-March, the segment recorded order inflow of Rs 996 crore recording YoY growth of 26 per cent. The order book of the segment stood at Rs 4,121 crore as on March 31, with 52 per cent being international.

Defence engineering segment: During the quarter January-March, the segment recorded an order inflow of Rs 1,049 crore recording a YoY decline of 10 per cent. The order book of the segment stood at Rs 9,216 crore as on March 31, with the international order book constituting 19 per cent of the total order book.

IT & Technology Services (IT&TS) Segment: The customer revenue during the quarter stood at Rs 6,350 crore (including Mindtree revenue of Rs 2,035 crore), recording a YoY growth of 68 per cent.

Financial Services Segment: The loan Book at Rs 98,384 crore was marginally lower as compared with March 2019 at Rs 99,121 crore in a volatile and tight liquidity environment. The operating margin of the financial services segment for the year ended March 31 was lower at 19.9 per cent as compared to the previous year at 24.5 per cent on account of higher credit cost due to additional prudential provisions and Covid-19 related provisions as per RBI guidelines.