L&T gains amid margin expansion in Q3

L&T's operating margins have shown a marked improvement, rising 186 bps, year-on-year, to 11.6 per cent

Shares of Larsen & Toubro was up nearly 3% at Rs 1,032 in early trades as the company's margins witnessed expansion during the third quarter ended December post the demerger of its hydro carbon business.

The de-merger has aided margins as the hydrocarbon business has been a drag on margins. In Q3, L&T's operating margins have shown a marked improvement, rising 186 bps, year-on-year, to 11.6 per cent, which is well ahead of estimates.

The engineering major has posted a revenue growth of 12 per cent, after adjusting for the de-merger of its hydrocarbon business, a 180 basis points (bps) jump in operating margins and a 22 per cent growth in order inflows.
 

With de-merger of the hydrocarbon business, which accounts for 10 per cent of total revenues, L&T would now have to clock revenues of Rs 61,000 crore to meet its guidance, against the earlier estimate of Rs 69,000 crore.