L&T beats street estimates, net profit jumps 44%

Engineering major Larsen & Toubro (L&T) reported a 44 per cent jump in standalone net profit for the fourth quarter at Rs 1,438 crore, compared to Rs 999 crore in the same quarter last year. The revenues of the company grew 28 per cent to Rs 13,585 crore from Rs 10,605 crore in the corresponding quarter last year.

L&T reported a 1.1 per cent jump in the earnings margin before interest, taxes, depreciation and amortisation (Ebitda) in the fourth quarter, which stands at 15.1 per cent, compared to 14 per cent last year. The order inflow grew 90 per cent, that is, by Rs 23,843 crore, in the January-March quarter. "The numbers are above our expectations. In the last three to four quarters, the performance had not been up to the mark and people talked about execution capabilities. However, as the order book was good, the company’s performance picked up. We wil upgrade the target price,” said Sailesh Kanani, analyst at Angel Broking. L&T's stock went up five per cent to close at Rs 1,605 per share, in today's trade.

For the financial year ended 2009-10, L&T’s consolidated revenues grew 8.5 per and its annual net profit grew 43 per cent to Rs 5,450 crore. The company's orderbook grew 35 per cent to stand at Rs 1,00,239 crore. The company also posted an all-time high Ebitda margin for the year, at 13 per cent as opposed to 11.6 per cent last year.

“This growth in Ebitda margin is due to the low commodity prices for the major part of the last year. As commodity prices are now rising, it will be a challenge to maintain these margins. We are trying to see if we can order material even before the order is received. We also have to watch the prices of steel, but we are trying to make up for it by cost reduction and operational efficiencies. We have to work smart to maintain our margins,” said A M Naik, chairman and managing director of L&T.

For the financial year 2010-11, Naik forecast an orderbook growth of 25 per cent and revenue growth of 20 per cent. The company says that the outlook for the year ahead is good with increased spending on infrastructure. However, this year could also be challenging in terms of execution and increased competition. L&T plans a capex of Rs 2,200 crore for the current financial year, to spruce up its manufacturing facilities.