Larsen & Toubro Ltd's Q1FY20 consolidated net profit rises 20.5% yoy to Rs1,361cr: Misses Estimates

The company’s consolidated revenue stood at Rs29,636cr, up 9.7% yoy.

July 23, 2019 5:10 IST | India Infoline Research Team

Larsen & Toubro Ltd Q1FY20

Consolidated Results Q1FY20: (Rs. in cr)

Q1FY20 YoY (%)
Revenue 29,635.95 9.7
EBITDA 3,318.94 20.4
EBITDA Margin (%) 11.2 99
Net Profit (adjusted) 1,360.50 20.5
***EBITDA margin change is bps
L&T reported numbers for Q1FY20 came in below expectations on all fronts. The consolidated revenue from continued operations grew by 9.7% yoy to ~Rs29,636cr vs. median consensus estimates of Rs31,322cr. EBITDA was up by 20.4% yoy to ~Rs3,319cr against median consensus estimates of Rs3,466cr. EBITDA margin expanded by ~99bps yoy to 11.2%. Consolidated PAT including PAT from discontinued operations grew by 21.2% yoy to Rs1,473cr against median consensus estimates of Rs1,618cr. PAT from continuing operations for the quarter ended June 30, 2019 came in at ~Rs1,361cr, up 20.5% yoy.
  • The Electrical and Automation business has been classified as "discontinued operations," consolidated only at profit level in the Profit & Loss Account. The segment's revenues grew by 6% yoy Rs1,359cr. EBITDA margin improved to 16.9% from 13.3% in Q1FY19. Accounting for business revenue and EBITDA, the consolidated revenue would be marginally lower (-1%) than consensus estimates, while consolidated EBITDA would have been higher (2.4%) than median consensus estimates.
  • The company successfully won new orders worth Rs38,700cr at the group level during the quarter ended June 30, 2019, registering a growth of 11% yoy.
  • International orders during the year at Rs9,005cr constituted 23% of the total order inflow.
  • The consolidated order book of the group stood at Rs2,94,014cr as of June 30, 2019.
  • Orders from the central and state governments were affected during the general elections, while strong PSU and private sector orders enabled growth for the quarter.
  • Infrastructure Segment:
    • The Infrastructure segment secured fresh orders of Rs17,497cr, lower by 10% yoy. Order wins were mainly from the airport sector, apart from the gold beneficiation award in Saudi, water supply distribution orders from Sri Lanka, a notable desalination plant order in Gujarat, and an order for a Defence telecom network.
    • International orders accounted for 28% of the total order inflow of the segment.
    • The order book of the segment stood at Rs2,18,825cr.
    • The Infrastructure segment recorded customer revenue of Rs13,865cr, up 14% yoy. Growth was contributed by good execution progress across business verticals of the segment. International revenue constituted 23% of the total customer revenue of the segment.
    • The segment's EBITDA margin was lower at 6.4% vs. 6.8% in Q1FY19, largely due to job mix and seasonality of execution.
  • Hydrocarbon Segment:
    • Order inflows came in at Rs3,424cr, down 28% yoy, with no major international order.
    • The order book of the segment stood at Rs40,408cr, with international orders comprising 47%.
    • Hydrocarbon segment recorded Customer Revenue of Rs3,763cr, up 7% yoy.
    • International revenue constituted 49% of the total customer revenue.
    • The segment's EBITDA margin came in at 7.6% vs. 7.0% in Q1FY19.
  • The Power segment secured orders of Rs6,700cr comprising a large value domestic order for a 2x660 MW ultra- supercritical thermal power plant. The order book stands at Rs12,933cr (11% international). Revenue stood at Rs561cr (28% international revenue), down 48% yoy on lower opening order book.
  • The Heavy Engineering segment order inflows were Rs188cr (International orders constituted 55%), down 87% yoy mainly due to deferment of orders in the Oil and Gas sector. The segment's order book stood at Rs4,081cr (50% being international). Customer revenue was significantly higher at Rs874cr on execution momentum in oil & gas, and fertiliser and petrochemical projects.
  • The Defence Engineering segment's revenues grew by 33% yoy to Rs965cr led by pick up in execution of a significant order for tracked artillery guns.
  • IT and Tech services revenue was up 15% yoy, while EBITDA margins were impacted by ~160bps yoy on wage hikes and visa charges. Both LTI and LTTS were impacted on either weakness in top client (LTI) or client ramp down (LTTS).
  • The Financial Services segment's revenue grew by 13% yoy driven by growth in loan assets and accrual of revenue on favourable outcome of NCLAT order in connection with exposure to IL&FS. The loan book grew by 16% yoy to Rs99,904cr.

Technical View:

Larsen & Toubro Ltd ended at Rs. 1,410, up by 6.2 points or 0.44% from its previous closing of Rs. 1,403.80 on the BSE.
The scrip opened at Rs. 1,411.20 and touched a high and low of Rs. 1,414.70 and Rs. 1,386.50 respectively. A total of 42,18,778 (NSE+BSE) shares were traded on the counter. The stock traded above its 50 DMA.

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