Larsen & Toubro Ltd (Q2 FY14)

India Infoline News Service | Mumbai |

LT’s topline of Rs145bn was higher by 10% yoy, marginally higher than our estimate of Rs143bn.

CMP Rs872, Target Rs948, Upside 8.7%
 
  • Order inflow continued to remain strong at Rs265bn, up by 26% yoy and higher than the full year guidance of 20% yoy

  • Standalone revenue of Rs145bn was marginally higher than our estimate on the back of strong execution in the infrastructure segment

  • Operating margin for the company shrunk by 96bps yoy due to a higher employee expenses, under utilization of few segments, forex loss and losses booked in the shipbuilding subsidiary

  • Margins for most of the segments was higher on a yoy basis, but overall margins were impacted by one–offs

  • Management has maintained its guidance of 15-17% yoy growth in revenue and 20% growth in order inflow for FY14

  • Margin pressure and execution risks to keep earnings in check; Maintain our Market Performer rating with a price target of Rs948

Result table (Standalone)
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BSE 1,208.40 19.55 (1.64%)
NSE 1,207.30 18.50 (1.56%)

***Note: This is a NSE Chart

 

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(Rs mn)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
145,095
131,952
10.0
125,551
15.6
Material costs
(60,080)
(61,025)
(1.5)
(49,310)
21.8
Sub-contracting charges
(35,259)
(28,688)
22.9
(35,562)
(0.9)
Personnel costs
(15,793)
(13,000)
21.5
(11,688)
35.1
Other overheads
(19,948)
(15,167)
31.5
(18,277)
9.1
Operating profit
14,016
14,072
(0.4)
10,715
30.8
OPM (%)
9.7
10.7
(100) bps
8.5
113 bps
Depreciation
(2,164)
(2,040)
6.1
(2,103)
2.9
Interest
(2,428)
(2,350)
3.3
(2,453)
(1.0)
Other income
4,494
3,276
37.2
4,726
(4.9)
PBT
13,919
12,958
7.4
10,885
27.9
Tax
(4,145)
(4,257)
(2.6)
(3,325)
24.7
Effective tax rate (%)
29.8
32.8

30.5

Adjusted PAT
9,774
8,701
12.3
7,560
29.3
Adj. PAT margin (%)
6.7
6.6
14 bps
6.0
71 bps
Extra ordinary items
-
2,672
-
-
-