Larsen & Toubro reported 27 per cent fall in consolidated net profit in Q4 of FY 2015 on the back of slower sales growth and fall in margins in most of its key businesses.
Net profit was lower at Rs 2,069 crore in comparison to Rs 2,840 crore in same period last year. Quarterly revenue grew 4 per cent to Rs 28,022 mcrore on a y-o-y basis and Ebidta margin was 0.9 per cent lower at 13 per cent.
While the company missed its annual revenue guidance, reporting 8 percent growth (against a revised 10-15 percent guidance), it surpassed its annual order inflow target with 22 per cent growth (against a revised 15-20 per cent guidance).
Total orders wins in FY 2015 were Rs 1.55 lakh crore with bulk of orders coming from infrastructure segment. L&T said it is anticipating a rebound in economy and expecting 15 per cent growth in orders and revenue in FY 2016.
The company's revenue figure missed analyst expectation but exceeded the profit estimate. Bloomberg had estimated L&T's consolidated revenue at Rs 32,000 crore and net profit of Rs 1,715 crore.
Consolidated profit after tax (PAT) for the full year at Rs 4,765 crore was lower in comparison with a PAT of Rs 4,902 crore for the previous year, mainly due to challenges faced during execution of international projects in the hydrocarbon sector, the company said in a statement.
While overseas contracts kept driving L&T's growth engine in past couple of years the company will now focus on domestic business. A domestic focus would also limit execution risks faced by the company in recent years. It will also explore opportunities to monetize development projects such as roads this year.
In FY 2015 domestic orders made 75 per cent of total inflow compared to 67 per cent in the previous year.
“We now see more prospects in India. Our reliance on international projects is coming down. With decline in oil prices projects in Gulf are being deferred. The domestic situation is looking better,” L&T's group executive chairman A M Naik said.
Naik said the company was confident of securing orders in road construction space with the government giving push to infrastructure. He said the company had already secured eight orders in that space. Also, the hydrocarbon business was expected to perform better within India with proposed expansion of five fertiliser plants.
Naik said the revenue was impacted because of project constraints such as land acquisition problems and liquidity problems faced by customers. “It is not due to execution issues from our side,” he said.
L&T's chief financial officer R Shankar Raman said the company has been achieving 20 per cent growth in orders year-on-year. “The inflows have become large and it is not easy to replicate it endlessly,” he said.
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