L&T Q3 earnings today: Here's what analysts expect

Engineering and construction major Larsen & Toubro is expected to announce its financial results for third quarter of FY19 (October-December period) today.

According to analysts, the quarter gone by was muted for capital goods universe order inflows due to cautious stance ahead of general elections in 2019 and subdued private capex. However, engineering, procurement and construction (EPC) companies such as L&T, KEC International and Kalpataru Power are expected to report strong performance. 

During Q3FY19, L&T announced order inflows worth Rs 16,869 crore, which includes Rs 6,512 crore in power T&D, Rs 5,021 crore in water & effluent treatment segment, Rs 2,760 crore in building & factories segment and remaining orders across construction business. 

Front loading of orders by L&T suggests better execution rate in domestic market in Q3FY19E before upcoming general elections, say analysts at ICICIdirect in a results preview note. The brokerage firm expects L&T’s revenues to grow 13.6 per cent YoY to Rs 20,116.4 crore on a standalone basis. EBITDA margin is expected to improve 50 bps to 9.9 per cent with adjusted PAT to grow 16.9 per cent at Rs 1,377.5 crore with margin of 6.8 per cent. 

Maintaining 'BUY' call on the stock, Edelweiss Securities says given the strong balance sheet, L&T will stand the test of times. However, it estimates a decline of 24 per cent in order inflow at Rs 31,700 crore post a healthy H1. It expects 14 per cent YoY growth in core EPC revenues led mainly by the infra segment. Services businesses are expected to grow healthy in excess of 25 per cent.

Analysts at Motilal Oswal Financial Services (MOFSL) expect revenue growth of 12 per cent YoY to Rs 32,200 crore. "We have factored in 14.8 per cent YoY growth in the E&C segment driven by execution in the domestic segment. We expect operating profit margin to improve by 20 bp YoY to 11.1 per cent" in 3QFY19, they say. Net profit is expected to rise 19 per cent YoY growth to Rs 1,800 crore. 

Key monitorables include working capital and order inflow.