L&T Q1 2022 Results: Profits Jumped But Missed Estimates

L&T reported its Q1FY23 results on Tuesday evening, though the profit increased but was below estimates. The share price increased on Wednesday morning by nearly 3.5% and was trading at Rs 1812.25 per share.

L&T Q1 2022 Results: Key Highlights

• Profit: Rs 1,702 crore, up 45 YoY but down sequentially
• Revenue: Rs 35,853 crore, up 22% YoY but down sequentially
• Order Flow: Fresh orders worth Rs 41,805 crore

Let us look at all Q1FY23 numbers in detail:

L&T Q1 FY23 Earnings: Profits Rise 

L&T's consolidated net profit increased 45% year on year to Rs 1,702 crore in the quarter ending June. Sequentially, the net profit declined by more than 53% from Rs Rs 3,620.69 crore. The numbers were below the analyst estimate of Rs 1,956 crore.

L&T Q1 2022 Results: Revenue Increase 

Consolidated revenue from operations increased by 22% year-on-year to Rs 35,853 crore. Sequentially, the revenue declined from Rs 52,851 crore. Revenue from international sales during the quarter stood at Rs 13,235 crore and constituted 37% of the total revenue. Revenue is in line with analysts' expectations of Rs 35,012 crore.

L&T Q1 FY23 Earnings: Operating Margins 

The operating margins for the company increased marginally from 10.81% in Q1FY22 to 11.04% in Q1FY23. The operating margins declined from 12.34% sequentially. Net profit margins increased from 4% in Q4FY22 to 4.75% in Q1FY23.

L&T Q1 2022 Results: Higher-order inflows

The company received fresh orders worth Rs 41,805 crore in Q1FY23, up 57% over the corresponding quarter of the previous year. Order inflows were lower than the March quarter’s fresh orders of Rs 73,941 crore. 

The consolidated value of the order book stood at Rs 3.63 lakh crore at the end of the June quarter. Orders were received across diverse segments like Public Spaces, Metros, Water Management & Waste Water, Factories, Minerals and Metal, Data Centers, Defence, etc. The International orders at Rs 17,842 crore during the quarter comprised 43% of the total order inflow. 

L&T Q1 FY23 Earning: Segment Wise Performance

Segment-wise and year-on-year, all the segments had higher order inflow in the June quarter. The Infrastructure segment reported revenue of Rs 14,181 crore, up 36% year-on-year. The EBITDA margin of the segment during the quarter ended June 30, 2022, was at 6.5% compared to 7.1% in the year-ago period.

The Energy segment reported good growth year-on-year with revenues of Rs 5,073 crore for the quarter ended June, a growth of 3% over the corresponding quarter of the previous year. The EBITDA margin of the segment during the quarter ended June 30, 2022, was at 8.5% compared to 7.5% in the year-ago period.

Hi-Tech Manufacturing Segment reported revenue of Rs 1,272 crore in the June quarter, recording a marginal year-on-year growth of 3%. The EBITDA margin of the segment at 15.1% for the June quarter declined compared to 19.2% in the year-ago period.

L&T Q1 2022 Results: Outlook 

The Indian economy continues to sustain the strong recovery momentum evidenced by robust monthly high-frequency indicators. The Government’s move on imposition of export duty on steel and petroleum, cut taxes on petrol and diesel, restrictions on food exports, and RBI’s recent action of increasing the REPO rate should ease the overall inflationary pressure.

L&T Q1 FY23 Earnings:  Analysts' Call

Edelweiss Securities: The firm has given a BUY call on L&T stock with a target price of Rs 2,370 per share. The brokerage firm believes that L&T's FY23 guidance with a robust pipeline will help it comfort global headwinds. L&T’s pace of core operations seems slow, however, they see a potential for a better earnings/balance sheet profile.

ShareKhan: The firm has given a BUY call with a target price of Rs 2,075 per share. The healthy order inflow guidance and optimistic management commentary on order prospects going forward give them comfort. The international outlook looks positive as there are a host of opportunities.