L&T's four verticals find it tough going

Four major verticals in Larsen and Toubro (L&T), India's largest private engineering and construction company , find it tough in its business because of the lower growth when 'Make in India' begins to take off. In the December ended quarter, the verticals-power, metallurgical and material handling, heavy engineering and hydrocarbon-have faced fall in profits.

The company's standalone profit fell 15 per cent to Rs 1,059.8 crore and revenues grew slightly by 4 per cent to Rs 14,995 crore, compared to the same period last year. The share price has fallen by 6.61 per cent to Rs 1,573 on BSE, compared to a 1.71 per cent fall of Sensex on Monday. The expectations of analysts (average) were a profit of Rs 1,212 crore and a revenue of Rs 17,854 crore.

Lower order book position and delay in receiving fresh orders have hammered the prospects of the underperforming divisions. The power division has witnessed its customer revenue dip by 30 per cent to Rs 1,133 crore. The segment's EBIDTA margin stood lower at 19.7 per cent vis-a-vis 22.2 per cent year-on-year (y-o-y). Profit before interest and tax (PBIT) fell from Rs 317 to Rs 153 crore.

The metallurgical and material handling segment's customer revenue has fallen by 56 per cent to Rs 690 crore on account of lower executable order book. The EBIDTA margin of the segment declined to 9.3 per cent vis--vis 11.9 per cent. PBIT fell from Rs 220 crore to Rs 40 crore. The heavy engineering division registered a customer revenue of Rs 814 crore, a decline of 25 per cent-the reason is same as above. The EBIDTA margin of the segment fell to 10.4 per cent vis-a-vis 15.3 per cent. PBIT fell from Rs 116 crore to Rs 41 crore.

The hydrocarbon segment recorded customer revenue of Rs 1,778 crore, a decline of 26 per cent on poor order book. The EBIDTA margin of the segment was negative at 4.8 per cent vis-a-vis positive margin of 1.6 per cent. PBIT faced a loss of Rs 137 crore compared to Rs 54 crore.

The saving grace is L&T's infrastructure business. The segment continued to be unshaken, generating 22 per cent rise in revenue at Rs 11,553 crore during the quarter. But the EBIDTA margin at 9 per cent is lower than the 10.4 per cent that recorded in the same quarter of the previous year. The order inflow during the quarter was mainly contributed by heavy civil Infrastructure, water and renewable energy and buildings  and factories businesses. The order book of the segment grew by 19 per cent on a y-o-y basis and stood at Rs 1,59,543 crore.

IT and technology services (revenue up by 22 per cent), financial services (up by 23 per cent), electrical and automation, developmental projects and segments comprises realty and shipbuilding have also supported the company's efforts to shrug off the heavy losses.

L&T's overall fresh orders rose by 19 per cent to Rs 34,580 crore at consolidated level and international order inflow is 18 per cent of the overall.  The order book stood at Rs 2,25,788 crore, higher by 17 per cent year-on-year basis. International order book constituted 25 per cent of the overall pie.