Earnings Outlook
Overseas, govt orders seen driving L&T consol PAT Jan-Mar
This story was originally published at 20:53 IST on 5 May 2025
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By Avishek Rakshit
KOLKATA - Engineering, procurement, and constructions companies are expected to bear the brunt of lack of capital expenditure by the private sector, but Larsen & Toubro Ltd. may have a smooth sailing even in these troubled times on account of the company's wide exposure to Indian and global markets, and the variation of projects that the company undertakes.
Larsen & Toubro, or L&T it is widely referred to, is expected to report a near 10% on-year jump in its consolidated net profit for the March quarter to over INR 48 billion and consolidated revenue is estimated to jump by 14% on year to nearly INR 765 billion, according to the average of estimates from nine brokerages. Sequentially, the net profit will likely swell by 43% and revenue may go up by over 18%. L&T will declare its financial results for the quarter and year ended March on Thursday.
Nomura Equity Research pegged the net profit the highest at over INR 53 billion and Elara Securities (India) Pvt. Ltd. estimated the lowest level at nearly INR 39 billion. Motilal Oswal Financial Services Ltd., which has the highest revenue estimate for L&T, pegged it at INR 800 billion, and Elara Securities, which predicted the lowest profit, estimated the revenue lowest as well at nearly INR 692 billion.
L&T had reported a consolidated net profit of nearly INR 44 billion in the year-ago quarter, and nearly INR 34 billion in Oct-Dec of the previous financial year. Its revenue was nearly INR 671 billion in the year-ago quarter and nearly INR 645 billion in the sequential quarter.
JM Financial Institutional Securities Pvt. Ltd. said revenues of companies in this sector are likely to be a mixed bag. While companies like KNR Constructions Ltd., PNC Infratech Ltd., Ashoka Buildcon Ltd., and others may report subdued performance on account of low order execution and backlogs, others like L&T and KEC International Ltd. could report stronger financial performance owing to their exposure and order execution which will aid revenue and profit growth.
Order inflows for companies like L&T were strong during the latest quarter, but weak for companies focussed on highway construction. Also, order backlogs remain moderate to strong for most companies, JM Financial said and added operating margins could improve for most companies in this sector.
Kotak Institutional Equities expects L&T to report an 18% on-year revenue growth in its engineering, procurement, and constructions business and 16% growth in its overall consolidated business. Although Kotak anticipates weakness in domestic order execution, the overseas business will help L&T ease its blues at home. Half of L&T's core engineering and constructions India revenue comes from the central and state governments, and public sector enterprises. Thus, even if L&T's exposure in the projects developed by the private sector may feel some delays, half of this business, which depends on government and public sector unit projects, is expected to be on track.
However, the company is expected to perform well in global markets, especially in West Asia. Qatar has given an energy project to L&T valued at $4 billion, which incidentally is the largest order the company has ever received in its history. The ongoing orders from West Asia are expected to keep cash flows healthy and revenue from this region could grow by 23% on year, Kotak said. Considering the overall impact of order inflows and its execution, in India, and abroad, Motilal Oswal Financial Services Ltd. expects L&T to report 19% on-year revenue growth at a consolidated level.
Nuvama Wealth Management Ltd., which is concerned about private capital investments not picking up in Jan-Mar, said that L&T will focus on making its subsidiaries self-sustainable, increase its presence in green energy projects, and exit some of the non-core businesses. With robust order inflow growth, completion of legacy projects, refinancing of the Hyderbad metro project, margins may see a ramp-up but at a slower pace, Nuvama said.
L&T is expected to report an earnings before interest, tax, depreciation, and amortisation of INR 81.8 billion in Jan-Mar, according to the average of estimates from eight brokerages. The highest EBITDA estimate of INR 85.7 billion is from HDFC Securities Ltd. and the lowest estimate of INR 69.7 billion is from Elara Securities.
Kotak said L&T's operating margins in the core engineering and constructions segment could increase by 50 basis points on year to 9.8% on account of benign commodity and crude prices, but execution of mega-hydrocarbon projects won last year may not be margin accretive at a segmental level. Motilal Oswal Financial Services, on the other hand, has projected a 50-basis-point decline in the core margins as more projects reach the margin recognition threshold and as legacy orders near completion.
The stock has fallen nearly 3% since the company released its December quarter results on Jan. 30. Monday, shares of L&T closed flat at INR 3,330.2 on the National Stock Exchange.
Following are the Jan-Mar earnings estimates for L&T based on reports from nine brokerages in descending order of the estimate of net profit:
| Broker Name | Net Sales (in million rupees) | Net Profit (in million rupees) | EBITDA (in million rupees) |
| Nomura Equity Research | 7,80,848.00 | 53,356.00 | 84,701.00 |
| Kotak Institutional Equities | 7,81,136.00 | 49,128.00 | 83,903.00 |
| Nuvama Wealth Management Ltd | 7,45,626.00 | 49,093.00 | 78,924.00 |
| JM Financial Institutional Securities Pvt Ltd | 7,29,276.00 | 48,990.00 | 84,644.00 |
| Prabhudas Lilladher Pvt Ltd | 7,83,399.00 | 48,616.00 | 84,337.00 |
| HDFC Securities Ltd | 7,84,800.00 | 48,600.00 | 85,700.00 |
| Sharekhan Ltd | 7,84,900.00 | 48,300.00 | |
| Motilal Oswal Financial Services Ltd | 8,00,204.00 | 48,262.00 | 82,842.00 |
| Elara Securities (India) Pvt Ltd | 6,91,819.00 | 38,900.00 | 69,700.00 |
| Average | 7,64,667.56 | 48,138.33 | 81,843.88 |
End
US$1 = INR 84.25
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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