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L&T: Muted performance - Views on News from Equitymaster
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L&T: Muted performance
Jul 22, 2013

Larsen & Toubro (L&T) has announced the first quarter results of financial year 2013-2014 (1QFY14). The company has reported 5% YoY growth in sales while net profit has declined 12.5% YoY. Here is our detailed analysis of the results.

Performance summary
  • Standalone net sales for the company grew by 5.0% YoY during 1QFY14. The company from this quarter onwards will be classifying Engineering & Construction (E&C) into various heads. As per the new classification of E&C, muted sales growth was a result of poor show of Power and Metallurgical & Material Handling segments.
  • Operating expenses for the company increased by 5.6% YoY. While raw material cost as a percentage of sales declined from 69.4% in 1QFY13 to 67.6% in 1QFY14; there was a sharp increase in other manufacturing costs and staff cost. Consequently, operating profit declined by 1.2% YoY in 1QFY14. As a result, operating margin declined to 8.5% in 1QFY14 from 9.1% in the corresponding quarter of last year.
  • Net profit declined by 12.5% YoY during the quarter due to poor performance at the operating level. The decline was further aggravated by decrease in other income and a slight increase in tax rate.
  • The company received orders worth Rs 251.6 bn during the quarter, a growth of 28% YoY. The total order backlog at the end of the quarter for the company stood at Rs 1,653.9 bn; growing by 8% YoY.

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