Larsen and Toubro (L&T) reported its highest ever fresh order intake in a quarter, which jumped 76% year-on-year to Rs 73,233 crore, even though the order book stood at a historic higher of Rs 3.13 lakh crore for the October-December 2020 period. The overall performance was backed by the corporation winning some major marquee orders throughout the quarter in the infrastructure segment. Revenues and profit right after tax also recovered sharply compared to the steep declines witnessed in the 1st two quarters of the economic year.
L&T reported a 5% year-on-year boost in the company’s net profit for the third quarter to Rs 2,467 crore, which was substantially above analyst estimates of Rs 1,902 crore. Revenues throughout the quarter, having said that, had been nonetheless slightly decrease as Covid-19 restrictions continued to have an influence on project web-site execution and Hyderabad metro operations. On a year-on-year basis, revenues declined 2% to Rs 35,596 crore, missing analyst expectations of Rs 36,612 crore. However, income was up a excellent 15% on a sequential basis.
Ebitda (earnings just before interest, tax, depreciation and amortisation) enhanced 4.3% y-o-y to Rs 4,280 crore, even though the Ebitda margins had been up 60 basis points y-o-y to 12%.
New orders incorporated big wins in High Speed Rail Corridor, 1 of the biggest orders in EPC in hydrocarbon sector throughout the quarter, and also some of the biggest gear supplies order in the building and mining enterprise. International orders throughout the quarter constituted 14% of the total order inflow, with 86% of orders coming in from domestic market place.
The heavy engineering and infrastructure important stated that it anticipated the order inflow momentum to continue or be even superior in the fourth quarter as it continued to see excellent order prospects. The self-assurance comes from the thrust that the government is providing on important sectors likes metro, higher speed corridor, roads, water options, renewable power, energy transmission and distribution and new prospects like bio-fuel and storage. However, the corporation has refrained from providing a guidance for the year.
SN Subrahmanyan, CEO and managing director, L&T, stated that the corporation is hopeful that the fourth quarter will be the identical or even superior quarter. “Both India and Middle East markets are tough. In India lot depends on the kind of push the government is going to give to infrastructure, in Middle East quite a bit depends on oil prices but at the same time they want to create jobs and keep population engaged, so we are hopeful that we will be able to keep the momentum that we have at the moment.”
Terming the quarter as a “blockbuster quarter”, R Shankar Raman, chief economic officer, L&T stated, “We saw remarkable improvement in business sentiments during the quarter at an industry level. This was on the basis of recovering economy from the lows of contraction of 28% and 24%, which has now come to a more single digit contraction, with lot of work being put in by lot of constituents. I would give this quarter gone by as a quarter of turnaround for the industry as a whole from the woes of the pandemic.”
He stated there has been a rise in demand across the board, which could be attributed to pent up demand or even incremental demand. “Statistics about the increase in demand for energy and energy consumption also bears the fact that there is turnaround in the economic and industrial activity of the country,” he stated. Strong collections for the corporation continued by way of to quarter 3. This has resulted in the reduction in working capital in excess of Rs 1,000 crore throughout the quarter, he stated.
However, with the uncertainty about the pandemic not more than but, Raman stated, “Time is not at right to drop the guard but to see how we could responsibly take the momentum that we have gained in Q3 forward.” He added that headwinds about the execution challenges continue to stay, even though lot of Covid protocols are cutting into productivity. “Supply chain is just about coming back to normalcy, however, challenges with partners remain. So, we also need to tread with caution in making sure that our commitments to the customers are backed by deliveries of the supply chain partners. The pandemic has also affected the liquidity of the clients so we had to tread carefully regarding execution until we were sure about the liquidity of the client.”
In terms of the segments, infrastructure segment secured orders of Rs 45,574 crore, throughout the quarter ended December 31, 2020, greater by 80% on y-o-y basis, with receipt of two marquee orders of High Speed Rail. The Ebitda margin of the segment stood at 6.2%, 10 basis points up annually. The energy segment did not safe any important order throughout the quarter. The segment Ebitda margin was at 2%, decrease compared to 3.4% in the corresponding quarter. Heavy engineering segment’s Ebitda margin came in at 20% a decline more than the corresponding quarter of the earlier year of 23.5%, on account of modifications in job mix. The hydrocarbon segment secured orders valued at Rs 12,820 crore throughout the quarter supported by receipt of some big worth domestic orders in the petrochemicals space.