L&T Q3 results: Net profit up 15.4% at Rs 2,947 cr on robust order inflows

Company expects to end FY24 at 20% growth in orders

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Engineering conglomerate Larsen & Toubro (L&T) has reported a 15 per cent rise in net profit for the December 2023 quarter (Q3FY24) on the back of better operational performance and more orders.

In the quarter, L&T reported a consolidated net profit (attributable to the owners of the company) of Rs 2,947 crore, up 15.45 per cent on a year-on-year (Y-o-Y) basis.

The company’s management indicated the pace of new orders in the domestic market had slowed and there would be weakness for the two quarters between now and June 2024 owing to the Lok Sabha elections.

Despite the slowdown, L&T expects to end FY24 with an order book of Rs 5 trillion and more than 20 per cent growth in its full-year order inflow.

Of the Red Sea-related concern, L&T said it had started working on other options.

In other updates for the quarter, the company said it produced India’s first domestically made electrolyser.

S N Subrahmanyan, chairman and managing director, said: “We have registered yet another quarter of strong performance despite headwinds from a volatile global environment and consequent supply-chain constraints.”

Revenue for the company was up 18.84 per cent Y-o-Y to Rs 55,128 crore.

“The business environment for the engineering and construction segment has become conducive in the past nine months, which has helped our Q3 performance,” said R Shankar Raman, chief financial officer and whole-time director.

The company, however, missed street estimates on profits. In a Bloomberg poll, 16 analysts estimated revenue of Rs 53,571 crore and nine analysts estimated an adjusted net income of Rs 3,245 crore. Sequentially, the company’s revenue rose 8 per cent and profit fell 8.54 per cent.

As of December 2023, L&T’s outstanding order book was at Rs 4.69 trillion, of which 29 per cent was international.

In the quarter under review, L&T won new orders worth Rs 75,990 crore, up 25 per cent from a year ago. Most of this growth came from international orders, and domestic orders declined 44 per cent from a year ago.

Shankar Raman said: “There are more orders to procure in the current quarter. Fresh project announcements in sectors such as power transmission and water may not happen (in Q4FY24).”

At the start of FY24, L&T guided for 10-12 per cent growth in orders.

West Asia is L&T’s largest market after India.

The top finance executive said commodity cost was less of a worry while logistics was emerging as a bigger concern.

On the company’s exposure to West Asia, he said, “There will be cost escalation and discussion on its compensation.”

L&T announced getting an order of more than Rs 10,000 crore to establish the largest renewable generation plant in the United Arab Emirates.

The company said it would invest Rs 2,774 crore in L&T Metro Rail (Hyderabad), a company subsidiary, as equity.