L&T consol Q3 PAT down 17% YoY at Rs 2,055 cr on input cost spike

Topline up 11% at Rs 39,563 crore, with infra segment contributing the highest followed by IT & Tech Services and hydrocarbon business

The country’s largest infrastructure company, Larsen & Toubro (L&T), reported a 17 per cent decline in consolidated net profit for the December quarter (Q3) as high raw material costs ate into the bottom line even as net sales rose.

At Rs 2,055 crore, net profit was down year-on-year (YoY), while top line grew 11 per cent YoY to Rs 39,563 crore, with the infrastructure segment contributing the highest followed by IT & technology services and the hydrocarbon business.

These were lower than Bloomberg’s estimate of Rs 2,392 crore and Rs 39,732 crore for net profit and sales, respectively.

The company witnessed recurring profit growth for the nine-month period ended December 2021 — at 40 per cent YoY. “The increase in revenue reflects an improving project execution momentum and robust growth in the IT & technology services portfolio,” L&T said.

At Rs 14,541 crore, international sales contributed to 37 per cent of the revenue. “The corresponding quarter of the previous year had an instance of a sale of commercial property and gain on divestment,” explained the company.

L&T bagged orders worth Rs 50,359 crore in Q3, registering a 31 per cent YoY decline, since the company had secured the biggest-ever engineering, procurement, and construction contract last year in the infrastructure segment — for Mumbai-Ahmedabad High Speed Rail.

As of December 31, 2021, the Mumbai-based company’s order book was at record Rs 3.40 trillion, providing multi-year revenue visibility.

“Robust order announcements and tendering activity continued at a brisk pace in the current year. With improved government finances, expect strong activity levels in Q4,” said R Shankar Raman, chief financial officer at L&T.

On commodity prices, the management believes the current uptrend is not sustainable. However, the fall in prices will not be sharp and immediate.

In terms of the earnings before interest, taxes, depreciation and amortisation margin, the IT & technology services segment contributed the highest at 23.8 percent followed by defence engineering (23.6 per cent) and heavy engineering (15.6 per cent).