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L&T Reports 41% Growth In PAT Excluding Its Divestment In Insurance Biz

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Larsen and Toubro – the diversified conglomerate has reported a PAT growth of 84.31% to 1435 cr. along with a revenue growth of 8.16%. The results also included sale of its General Insurance business for Rs 551 Cr to HDFC Ergo. But even without that, the PAT growth has been solid with 41% growth. The major segments contributing to this performance are its Hydrocarbon segment along with Electrical and Automation division.
 
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Key Takeaways:

  • Infrastructure segment accounts for 45% of the total revenue. But contributes only 31.8% of the PBIT. Revenue growth mainly driven by Hydrocarbon, Power, heavy Engineering  and its service business. Order book for this sector is over 180,000 cr. but execution is slow due to delays in approvals etc.
  • Its infrastructure segment reported lower profits comapred to previous year. PBIT of Infra segment was down by 20%. The company cited major issue from the infra segemnt being the delayed client readiness along with payment issues.
  • Operating Margin improved by by 41 basis point to 7.34%. Margin improvement mainly driven by its heavy Engineering , Hydrocarbon and Service Business.
  • The company has also quoted diminsihing impact of legacy projects in middle east aling with improved claim settlement has played a vital role in improving its performance in Hydrocarbon segment.
  • Finance costs come down by 19.85%. But Long term borrowing are still at the same level 65,500 Crs.
  • Total number of inflow of orders for the quarter stands at 31100 Crs. An increase of 10% with respect to Q2 FY16. Order inflow has been mainly from Domestic Infrastructure and International Hydrocarbon segment.
  • The total order book as of Septemeber 30 stands at 2,51,800 Crs. Out of which 29% are international orders. For the same period last year the order book was at  Rs 2,42,600 Crs.
  • If you remove the sale of the insurance business as an extraordinary item, pre-tax profits grew about 32%.
  • L&T has cut 14,000 jobs due to the slowdown. This might be a temporary move, but indicates that this major order book doesn’t mean as much to the business, and shouldn’t be considered as a big thing.

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Results came post market hours. The stock closed Rs 1329.6, 1.4% down than previous close, and is up about 3% today.
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Disclosure: No Positons