L&T has announced that for the year FY02 its profits have grown by 10% YoY. The topline of the company grew by a lacklusture 7% in the same period. For the fourth quarter however the topline grew by an encouraging 14% YoY. The net profits for the fourth quarter declined considerably by 25% due to a 15% increase in its operating expenses.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares
Diluted Earnings per share*
Performance in fourth quarter has been dismal. Depressed cement prices have been cited as the main reason for the drop in net profits. Also, the higher operating expenses has hit margins of the company. The operating profits for the fourth quarter fell by 11% YoY. The fourth quarter results are surprising, especially since L&T had perfromed well in the first three quarters of FY02. L&T reported net profit growth of 244%, 223% and 63% in the first three quarters respectively.
L&T's engineering and construction division reported a modest 7% growth in FY02. The company's order book has risen by 5% in FY02. A sluggish economy and lack of investments in the core sectors have been cited as reasons for the dismal growth in revenues from this division. The company, however, reported a 75% rise in its export revenues from this division. The company expects good business from the core infrastructure sectors like power and roads in the current year. Exports will remain a thrust area for the company going forward.
L&T's cement division has generated good business for the company in FY02. while the volumes from this division grew by 7% the revenues grew by 8%. Good domestic demand and increased cement exports have led to the good performance of the division. Cement prices have however come under increasing pressure due to oversupply in the market. In spite of the pressure on prices, sales realisation on cement for L&T has gone up by 4% to Rs 1,303/ tonne in FY02. Cement exports are likely to be a major focus area for the company going forward, especially after it obtained a European quality certification. This certification will ensure better access to the European markets.
The electrical and electronics division of the company has reported stagnant growth in FY02. The margins have come under pressure due to poor domestic demand and increased competition from multinationals. The company has concentrated its efforts towards exports and has acheived higher revenues from exports from this division. L&T has prepaid Rs 3.4 bn of its total long term debt of Rs 27 bn in FY02. The company also refinanced its loans to take advantage of low interest rates to further reduce its interest costs. A jump in tax expenditure is due to provisioning of Rs 293 m for deferred taxes in FY02.
The stock is trading at Rs 180 on a P/E multiple of 13x FY02 earnings. L&T's exposure to cyclical businesss makes it susceptible to domestic economic conditions. A lacklusture growth of the engineering business has affected the topline growth of the company. Early indications of an upturn in the domestic economy is encouraging news for the company. L&T will also benefit from the healthy demand from cement markets. With cement demand set to grow at nearly 8-9% for the next 2 years, L&T with its large capacity and extensive reach is in a good position to capitalise on the opportunity. The stock price is currently depressed due to the management's non commital attitude towards the demerger of the cement business. The valuations may improve once the management sets a deadline for the proposed demerger.
Larsen & Toubro (L&T) has announced third quarter results of financial year 2016-2017 (3QFY17). The company has reported 1.7% YoY growth in sales while profits have grown 38.9% YoY. Here is our analysis of the results.
Larsen & Toubro (L&T) has announced second quarter results of financial year 2016-2017 (2QFY17). The company has reported 8.5% YoY growth in sales while profits have grown 84% YoY. Here is our analysis of the results.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407