L&T Q2 results: Consolidated PAT falls 67% YoY to Rs 1,819 crore

Exceptional income in year-ago quarter pulled down profit

Engineering and infrastructure (infra) major Larsen & Toubro (L&T) reported a consolidated net profit of Rs 1,819.5 crore for the July-September quarter (second quarter, or Q2) of 2021-22 (FY22), down 67 per cent year-on-year (YoY), as the year-ago period’s profit was boosted by exceptional income.

Revenues for Q2FY22 were up 12 per cent YoY to Rs 34,773 crore as infra, information technology (IT) services, and the hydrocarbon business segments contributed significantly to the top line.

“The YoY fall in the company’s profits is mainly due to the base effect of our one-off exceptional items of Rs 10,650 crore (profit from discontinued operations) in the last year quarter - missing in Q2FY22,” said R Shankar Raman, chief financial officer, L&T, in an earnings call.

According to Bloomberg, analysts had pegged L&T’s top line at Rs 35,521 crore, earnings before interest, tax, depreciation, and amortisation (Ebitda) at Rs 3,995 crore, and the bottom line at Rs 1,718 crore.

The bottom line for Q2FY22 includes Rs 144 crore gain on divestment of stake in hydel power plant in Uttarakhand (a part of the Development Projects Segment) and tax expense of Rs 47 crore arising on transfer of the NxT Digital Business from the parent to Mindtree.

The company’s net profit after tax and share in profit/(loss) of joint ventures/associates from continuing operations before exceptional items (NPAT-EI) was up 51.4 per cent YoY at Rs 2,135 crore.

Sequentially, there is good improvement in all three crucial parameters - revenue, Ebitda, and NPAT-EI.

The company’s infra segment contributed the highest to revenue at Rs 14,156 crore, followed by IT and technology services at Rs 7,903 crore, and the hydrocarbon segment at Rs 4,884 crore.

Consolidated Ebitda stood at Rs 3,995 crore in Q2FY22, up 20 per cent YoY, and matched estimates.

In terms of segment-wise Ebitda, IT and technology contributed highest at 23.3 per cent, followed by heavy engineering at 15.7 per cent, and defence engineering at 13.7 per cent.

Ebitda margin at 11.5 per cent was higher than 10.7 per cent in the year-ago period and at 10.8 per cent in the preceding quarter.

The company’s order inflow was Rs 42,140 crore, up 50 per cent YoY and 59 per cent sequentially.

Shankar Raman expects the order inflow to reach pre-Covid levels by end-FY22. 

With regard to rise in commodity prices, L&T is rescheduling its contracts wherever possible. "Only 10 per cent of total projects is the worry," he added. 

But a bigger worry is escalating energy costs.