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From the corporate and market perspective L&T’s results is an indicator of infrastructure progress in the country. A policy paralysis led to the company looking at other avenues for growth, as a result the company increased its focus on global markets, especially middle east. It was one of the first company that raised its voice against the slow decision making process by the government, that too in its results announcement. More than the numbers that the company discloses every quarter, it is the guidance that decides the direction of the stock.
Following are the five key takeaways from L&T’s March 2014 quarter results.
1. L&T is signalling that worst is behind it. In the outlook statement the company says that it has successfully weathered the challenging times of the past few years and is well positioned to tap the emerging opportunities in its core businesses. The company looks forward to a period of renewed investment momentum and sustainable growth.
2. Slower clearance in India however resulted in lower growth rate in the fourth quarter on a year on year basis. The company posted a 11% growth in the quarter to Rs 20,229 crore. International business at Rs 2,966 crore grew by 25% during the same period.
3. The impact of its international business can be seen in the order book. While the company managed to get orders worth Rs 94,108 crore during FY14, a growth of 15%, its international order book grew three times over the previous year at Rs 30,752 crore (one-third of all orders). In the fourth quarter, international orders accounted for 43% of all orders.
4. Infrastructure division, which accounts for the major chunk of L&T’s sales, grew by 23% during the year and 17% during the fourth quarter. However, order inflow in this division registered higher growth rate at 37% for the year, but more importantly it grew at 64% in the final quarter, signalling a pick-up in activity.
5. Power segment continued to perform poorly recording a 36% negative growth in revenue on account of declining order book and delays in realizing order inflow. Order inflows fell by 59% during the year and the only reason it was stagnant in the fourth quarter is due to a large international order inflow. In other words, while there is a visibility of pick up in infrastructure projects, there is no sign of improvement in the power segment.
