L&T results: Street to watch out for order inflows, likely impact of GST

Analysts have estimated a profit of Rs 928.4 cr at a consolidated level

The Street will watch out for  Larsen & Toubro’s guidance on order inflow growth, status of defence orders and the impact of the goods and services tax (GST) regulation at its June-quarter earnings announcement on Friday.

In a Bloomberg poll, nine analysts estimated consolidated profits of Rs 928.4 crore and 10 estimated revenues at Rs 23,850 crore for the reporting quarter.

“A low margin and high tax base of the June quarter in the last fiscal year is likely to support a high earnings growth outcome for the engineering conglomerate in the quarter under review. We estimate a 10 per cent growth in core business revenue and Rs 950 crore consolidated profit after tax (PAT) (up 56 per cent year-on-year) in the June quarter,” said a JP Morgan report on L&T dated July 10.

On the order inflow expected, the report said, “The weak order disclosures for the June quarter so far indicate that markets will be bracing for a year-on-year inflow dip. If the June quarter orders fall more than 10 per cent, the management commentary around timing of fruition of big-ticket defence/urban infrastructure prospects through FY18 will be important.” For the current financial year, according to management guidance shared in May, order inflow is expected to grow in the range of 12-14 per cent and revenue to grow at around 12 per cent.

“In the management guidance on Friday, the Street would look for details on any impact due to the GST or expectation of any impact from the new tax regime in the coming quarters. In addition, visibility of defence orders in this financial year will also be key to look for,” said an analyst with a domestic brokerage firm.