L&T Q3 Results: Earnings in-line with street estimates

L&T q3 results

Profit below estimates: The net profit of the company declined 17% YoY to Rs 2,055 crore in the quarter ending December. Sequentially, the profit is higher from Rs 1,819.5 crore. However, the numbers were below the analyst estimate of Rs 2,185 crore.

The decline in the YoY number is largely on account of a higher base in the year-ago quarter. Last year, it did the sale of commercial property in the realty business and gained on divestment from discontinued operations of the electrical and automation business. 

Revenue rises: Consolidated revenue from operations increased by 11% YoY to Rs 39,563. Sequentially, the revenue was up from Rs 34,772.9 crore. The revenue is in line with analysts' expectations of Rs 39,687 crore. 

Operating margins: The operating margins for the company declined marginally from 12.02% in Q3FY21 to 11.45% in Q3FY22. Sequentially, it was flat and came down 4 bps from 11.49%.  

Higher order inflows: The company received fresh orders worth Rs 50,359 crore in Q3FY22. It was higher than the previous quarter’s fresh orders of Rs 42,140 crore. The consolidated value of the order book stood at Rs 3.4 lakh crore. International orders during the quarter constituted 24% of the total order inflow.  In 2020-21 L&T had secured the biggest ever EPC contract for Mumbai Ahmedabad High Speed Rail in the Infrastructure segment.

Segment Wise Performance: Segment-wise, it was a mix of some growth and declines. The Infrastructure segment saw sales rise 15.9 percent on-year to Rs 18,345 crore. The Power and Heavy Engineering segment reported good growth YoY. The IT segment recorded customer revenues of Rs 8,397 crore during the quarter ended December 31, 2021, recording QoQ growth of 7% and YoY growth of 29%.  The hydrocarbon segment, which is the third-biggest contributor to revenues, saw a growth of 11% on-year in the reported quarter to Rs 4,880 crore.

Management Commentary: The global macroeconomic environment is likely to slow down with vaccine inequality and the rapid spread of the Omicron variant. The world’s largest economies are expected to see a delay in the recovery process with deceleration in activity, diminished fiscal support, rising inflation, and lingering supply bottlenecks.

L&T Q3 Results Review:

L&T has reported Q3 results in-line with the street's expectations. In the backdrop of the current economic environment, the company continues its planned path of winning targeted orders, focus on profitable execution of its large order book, and leverage the strong growth momentum in its IT & TS portfolio. L&T maintains a “cautiously optimistic” view of higher capex spends in the near term as it believes ‘Atmanirbhar Bharat’ initiative is gathering full momentum.