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.
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.
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.
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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