Larsen & Toubro sees a slowdown in new orders in the first three months of 2021 ⁠— management says contracts have been deferred

Engineering and construction giant Larsen & Toubro (L&T) on Friday reported 11.3 per cent rise in consolidated net profit at Rs 3,820.16 crore for March quarter 2020-21 on the back of higher revenue from operations.

The company had posted a net profit of Rs 3,430.10 crore in the year-ago period, L&T said in a filing to BSE.

These figures take into account tax and share in profit (loss) of joint ventures/associates from continuing operations before exceptional items, it said.

Income of the company during January-March period increased to Rs 49,116.16 crore from Rs 44,905.76 crore in the year-ago period, the filing said.

During a conference call, R Shankar Raman, Whole-time Director and Chief Financial Officer of L&T said the company is happy to report very strong performance for March quarter.

"As you will notice the company is reporting consistent improvement quarter-on-quarter right from the dismal quarter one that we reported last year.

"Even though I realise that our business is not quarter-on-quarter business being a project company, it is very important that we measure the progress that we made in the very challenging environment and it helps a lot for our staff morale and motivation," he said.

Stating that the first two quarters of 2020-21 were very challenging he said there was vast improvement in December and March quarters and it feels good to end the year on a very strong note.

The company said in March quarter the "consolidated PAT at Rs 3,293 crore registered a Q-o-Q increase of 33 per cent and a Y-o-Y increase of three per cent over the profits for similar period last year."

L&T further said order inflow in January-March was at Rs 50,651 crore, lower by 12 per cent over corresponding period of the previous year with deferment of awards.

Significant orders during the quarter were received in various segments like factories, hydel and tunnel, metros, special bridges, nuclear power, rural water, renewable energy, hydrocarbon offshore and minerals and metal sector.

"International orders at Rs 18,439 crore during the quarter is at 36 per cent of the total order inflow, with receipt of biggest solar PV plant order and transmission line orders," it said.

The consolidated order book of the group stood at Rs 3,27,354 crore as on March 31, 2021, registering a growth of eight per cent over the year-ago period.

International orders constitute 21 per cent of the total order book.

"With the pandemic playing out the way that we are anticipating, things will improve slowly from Q2 onwards....We could look forward to a growth environment where growth could range anywhere up to low to mid teen in terms of order flows and revenues. We all also expect the margin to remain stable around the current level," Raman said.

"We are not hard coding the numbers on guidance but we are sharing our thinking the we are looking forward to growth over FY'21....The big assumption that we are making is that the second wave of COVID will leave us with no further damage in a month or two," he said.

Larsen & Toubro CEO & MD S N Subrahmanyan said the company will continue to build and execute on its commitments amid the second wave of the pandemic in the country. "We will calibrate our growth in the immediate future based on the operating environment and conditions resulting from this. Performance in the challenging FY21 reaffirms our strong position, stability in our performance and our ability to deliver in line with our strategic priorities inspite of the fact that almost 6 months were lost.

"There has been a positive Union Budget and there are more reasons to be optimistic that better days are coming. While some headwinds remain, we are well-positioned to meet the expectations of our customers and increase the value of our shareholders,'' he said.

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