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Informist, Thursday, Jul 18, 2024

 

By Rajesh Gajra

 

MUMBAI – Dependency on contracts from the Centre, state governments, and government-owned companies will likely rein in Larsen & Toubro Ltd's revenue for the quarter ended June, with the revenue growth down to single digit. Profitability of the company is seen at the same level as last year and the net profit growth will likely be subdued. Overall, the earnings of the largest engineering company in the country is expected to be relatively weak.

 

Larsen & Toubro will likely report a consolidated net profit of 28.14 bln rupees, down 36% from the previous quarter and up 12.9% on year, according to an average of estimates by six brokerage houses. The estimates for net profit range from 26.5 bln rupees to 29.8 bln rupees. In the March quarter the company's net profit rose 40% on quarter and 12.4% on year.

 

The engineering behemoth's consolidated revenue is seen at 515.47 bln rupees, down 23.2% on quarter and up 7.6% on year. Estimates for revenue range from 502.6 bln rupees to 535 bln rupees. The 7.6% expected revenue growth for the June quarter is lower than the actual growth for at least last 13 quarters, data from Informist Credit Standard shows. The consolidated earnings before interest, taxes, depreciation, and amortisation for the quarter is seen in the range of 51.7 bln rupees to 54 bln rupees.

 

L&T is seen as an outlier in the capital goods sector in terms of its expected weak performance in the June quarter. Motilal Oswal Financial Services expects L&T to register 8.2% increase in net profit for the June quarter. Excluding L&T, the capital goods companies the brokerage tracks are likely to post a 44% jump in aggregate net profit.

 

L&T likely faced weakness in execution in its core engineering, procurement, and construction business in May due to general elections in the country and in June due to hot weather, Kotak Securities' Institutional Equities Research said in its Apr-Jun preview note. This weakness, along with constraints on availability of labour, would result in a low 4% on-year revenue growth in engineering, procurement, and construction business. "We note that majority of revenues for L&T comes from the centre/state/CPSE (central public sector enterprise) customers, where aggregate capex for April-May is down (around) 23%," Kotak Institutional Equities said.

 

The company will detail its earnings on Wednesday. According to Motilal Oswal Financial, investors will be monitoring L&T's domestic tender pipeline, margin performance, and working capital cycle. "We would also look out for execution ramp-up in Saudi projects and how the Middle East pipeline is shaping up," the brokerage said.

 

At 1452 IST, shares of Larsen & Toubro were up 0.6% at 3,658.90 rupees on the National Stock Exchange.

 

Following are the Apr-Jun consolidated earnings estimates for Larsen & Toubro based on estimates from six brokerages: 

 

Broker name	Net Sales	Net Profit	EBITDA
	-------(In mln rupees)-------
Elara Securities (India) Pvt Ltd	5,07,466	27,368	51,753
HDFC Securities Ltd	5,12,341	29,829	55,753
Kotak Institutional Equities	5,02,627	29,069	53,887
Motilal Oswal Financial Services Ltd	5,35,000	27,000	54,000
Nuvama Wealth Management Ltd	5,17,482	29,051	53,301
Prabhudas Lilladher Pvt Ltd	5,17,896	26,504	52,596
Average	5,15,469	28,137	53,548

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

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