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L&T: Finally a good quarter! - Views on News from Equitymaster

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L&T: Finally a good quarter!
May 17, 2010

L&T declared its FY10 results. The company has reported 9% YoY growth in sales while its net profits have grown 26% year on year. Here is our analysis of the results.

Performance summary
  • Standalone net sales grow by a 28% YoY during 4QFY10. Growth led by a 28% YoY growth in sales of the company's engineering and construction (E&C) segment.
  • EBIDTA margins expand by 0.9% YoY during the quarter on the back of lower sub contracting charges as well as administrative expenses (as percentage of sales).
  • Excluding extraordinary items, net profits grow by 17% YoY during 4QFY10, a slower growth when compared to the topline on account of a big spike in interest expenses as also a much higher effective tax rate.
  • Extraordinary gain during the quarter of Rs 1,007 m includes a gain from the sale of the company's Petroleum Dispensing Pumps & Systems business.
Financial performance snapshot (Standalone)
(Rs m) 4QFY09 4QFY10 Change FY09 FY10 Change
Sales 104,690 133,749 27.8% 336,466 366,752 9.0%
Expenditure 91,214 115,343 26.5% 300,164 322,193 7.3%
Operating profit (EBDITA) 13,476 18,406 36.6% 36,302 44,559 22.7%
Operating profit margin (%) 12.9% 13.8%   10.8% 12.1%  
Other income 3,716 5,401 45.3% 10,318 12,699 23.1%
Interest 469 1,356 188.9% 4,156 5,053 21.6%
Depreciation 889 1,162 30.7% 3,060 4,146 35.5%
Profit before tax 15,833 21,288 34.5% 39,404 48,059 22.0%
Tax 4,409 7,914 79.5% 12,312 16,409 33.3%
Profit after tax/(loss) 11,424 13,374 17.1% 27,092 31,650 16.8%
Extraordinary Item (1,439) 1,007   7,725 12,105  
Net profit 9,985 14,381 44.0% 34,817 43,755 25.7%
Net profit margin (%) 10.9% 10.8%   8.1% 11.9%  
No. of shares       585.7 602.2  
Diluted earnings per share (Rs)*#         52.6  
P/E ratio (x)*         30.5  

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