Shares of Larsen & Toubro spurted after the company reported net profit at Rs.19.20bn for the quarter ended March 31, 2012 as against Rs.16.86bn in the same period last year, up 14% on year.
For the first time in at least five years, L&T ended an accounting year with lower order inflows than the previous year. Order inflows for FY12 fell 12% to Rs.706bn. A 32% decline on year in new orders in the engineering and construction segment in the final quarter was the main reason for the decline.
The company has performed well in a difficult year as it struggled to improve order inflows on a high base. Also, the company made up for the fall in order inflow from the local market by focusing on the overseas market. Unlike previous years when new overseas orders made up for 10-12% of total projects bagged, this year export orders accounted for 18% of fresh orders, reports said.
The company was also witnessing pressure on profit margins. Higher input costs, higher staff costs and market-to-market provision all hit profit margins.
However, the results suggest that L&T’s diversification and presence across countries has helped it mitigate the fall in new orders. Moreover, the company managed to grow its sales, net profits and order book in double digits because it ensured on-time execution.
Shares of L&T ended at Rs.1,222.50, up 5.4% over the previous close. It had touched a day’s high of Rs.1,234 and a day’s low of Rs.1,143.25. The total traded quantity of the shares stood at 9.22 lakh shares on the BSE.