Larsen & Toubro - Quarterly Results

Let us focus on the top line first. Larsen & Toubro reported 11.14% higher sales revenues for the Dec-21 quarter at Rs.39,563 crore. These are the numbers on a consolidated basis inclusive of all its group businesses. During the December 2021 quarter, L&T saw strong revenue growth traction across infrastructure vertical, hydrocarbons vertical and the IT and technology vertical. On a sequential basis, the revenues were up by 13.78%.

However, heavy engineering and the defence engineering businesses saw revenues come under pressure due to tepid order flows and weak execution due to an uncertain environment. The overall order book of L&T stood at a record level of Rs.340,365 crore, which is the highest aggregate level ever achieved by L&T. The company has also bagged orders worth Rs.50,359 crore afresh during the Dec21 quarter.

Let us not turn to the operating performance of L&T. For the Dec-21 quarter, the operating profits were up on a YoY basis by 6.15% at Rs.3,798 crore. EBIT growth was extremely strong on a YoY basis in the infrastructure vertical as well as in the IT and Technology verticals. However, EBIT growth came under pressure in hydrocarbons vertical, heavy engineering vertical and also in the defence engineering vertical.

There was also the cost issue. A sharp spike in construction costs and the cost construction material in the quarter had its impact of muting the operating profit growth on a YoY basis to just about 6.2%. Supply chain constraints continued to impact the company. Operating margins fell from 10.05% in Dec-20 quarter to 9.60% in Dec-21 quarter. Operating margins were higher on a sequential basis, albeit by just about 21 bps.

Finally, let us turn to the bottom line. Net Profits for the Dec-21 quarter were down -16.7% YoY at Rs.2,055 crore on the back of the weak operating performance getting transmitted to the bottom line. There was one more reason for the fall in net profits. The company had reported exceptional gains of Rs.209 crore in the Dec-20 quarter from the sale of discontinued operations net of tax.

All the above factors had contributed to the fall in net profits on a YoY basis. The other income also halved at Rs.571 crore on a YoY basis. The PAT margins fell from 6.93% in the Dec-20 quarter to 5.19% in the Dec-21 quarter. However, the PAT margins were just marginally lower by 4 basis points when looked at on a sequential basis.