Larsen & Toubro profit down 27 pct but home market improving

NEW DELHI/MUMBAI (Reuters) - Industrial group Larsen & Toubro reported a 27 percent drop in net profit in the three months through March, that nevertheless beat estimates, and said it was upbeat on prospects in its domestic market.

The company, whose performance is seen as a gauge of the health of the Indian economy, has been cautious in recent quarters on the outlook for domestic demand for its engineering, construction and manufacturing goods.

On Saturday, L&T said while a subdued investment climate in the past year had limited opportunities for the capital goods and infrastructure sector, but it had seen signs of a pickup in India.

"Though demand in short-term remains impacted, the reform process in India is expected to gain ground in the medium term," the company said in a statement.

The Mumbai-based company, which builds everything from metro trains to parts for the rocket that India last year sent to Mars, said its order book, about a third of which comprises international business, grew 28 percent over the last year.

"India seems like it's returning to (the recovery phase of the) investment cycle," Group Executive Chairman A. M. Naik told reporters.

But Naik said it would look to maintain a predominance of domestic business. "We will regulate international projects to a maximum of 30 percent," he said.

The company posted a net profit of 20.7 billion rupees ($325 million) for its fiscal fourth quarter, compared with 28.4 billion in the same quarter last year.

Analysts, on average, were expecting the company to make 18.46 billion rupees, as per Thomson Reuters data.

($1 = 63.7332 Indian rupees)

(Reporting by Tommy Wilkes in New Delhi and Nivedita Bhattacharjee in Mumbai; Editing by David Holmes and Rosalind Russell)