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L&T: Private Sector Capex Remains in a Tizzy - Views on News from Equitymaster
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L&T: Private Sector Capex Remains in a Tizzy
Jul 24, 2017

Larsen & Toubro (L&T) has announced fourth quarter results of financial year 2016-2017 (4QFY17). The company has reported 12% YoY growth in sales while profits have grown 28% YoY. Here is our analysis of the results.

Performance summary
  • Consolidated net sales for the company grew by 12% YoY during 4QFY17.
  • Operating expenses for the company increased by 14.5% YoY. Operating profit fell 3.6% YoY in 4QFY17 as a result. Consequently, operating margin fell to 11.8% from 13.7% in the corresponding quarter of last year.
  • Net profit grew by 28.2% YoY during the quarter.

    Financial performance snapshot (Consolidated)
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Sales 328,755 368,280 12.0% 1,019,753 1,100,110 7.9%
    Expenditure 283,808 324,929 14.5% 915,125 989,363 8.1%
    Operating profit (EBDITA) 44,947 43,351 -3.6% 104,628 110,747 5.8%
    Operating profit margin (%) 13.7% 11.8%   10.3% 10.1%  
    Other income 1,450 3,995 175.4% 9,044 14,010 54.9%
    Interest 4,394 2,966 -32.5% 16,551 13,398 -19.0%
    Depreciation 4,244 7,227 70.3% 17,867 23,699 32.6%
    Exceptional items 485 -2,810   942 1,214 28.9%
    Profit before tax 38,245 34,342 -10.2% 80,196 88,874 10.8%
    Tax 10,094 3,372 -66.6% 24,848 20,066 -19.2%
    Extraordinary items, net of tax 0 0   0 0  
    Profit after tax/(loss) 28,151 30,970 10.0% 55,349 68,808 24.3%
    Net profit margin (%) 8.6% 8.4%   5.4% 6.3%  
    Share in profit of associates -3,328 834   -9,902 -3,953  
    Minority interest 1,504 1,915   3,151 4,757  
    Profit after share of associates & minority interest 23,320 29,889 28.2% 42,297 60,098 42.1%
    Other comprehensive income 2,550 3,800   1,591 1,778  
    Total income 25,870 33,689 30.2% 43,887 61,876 41.0%
    No. of shares         933.0  
    Basic reported earnings per share (Rs)*         64.4  
    P/E ratio (x)*         18.3  

    (*on a trailing twelve month basis)


    Segment-wise performance (Consolidated)
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Infrastructure 187,548 203,010 8.2% 505,583 539,208 6.7%
    % share 55% 54%   48% 48%  
    EBIT margin 15.0% 12.4%   9.9% 8.8%  
    Power 18,916 18,386 -2.8% 64,268 69,388 8.0%
    % share 6% 5%   6% 6%  
    EBIT margin -1.8% 3.2%   1.8% 2.9%  
    Heavy Engineering 10,605 10,347 -2.4% 32,559 34,469 5.9%
    % share 3% 3%   3% 3%  
    EBIT margin -0.4% 21.8%   -3.0% 14.5%  
    Electrical & Automation 16,181 16,786 3.7% 54,013 53,673 -0.6%
    % share 5% 4%   5% 5%  
    EBIT margin 11.8% 14.3%   8.0% 10.2%  
    Hydrocarbons 24,494 25,797 5.3% 86,183 96,283 11.7%
    % share 7% 7%   8% 9%  
    EBIT margin -3.6% 8.1%   -1.1% 5.3%  
    IT & Technology Services 23,753 25,486 7.3% 90,146 98,875 9.7%
    % share 7% 7%   9% 9%  
    EBIT margin 18.2% 17.9%   17.6% 18.5%  
    Financial Services 21,233 22,065 3.9% 76,950 85,453 11.0%
    % share 6% 6%   7% 8%  
    EBIT margin 26.6% -2.4%   16.9% 9.2%  
    Developmental Projects 8,450 10,065 19.1% 46,200 43,673 -5.5%
    % share 2% 3%   4% 4%  
    EBIT margin 11.1% -6.2%   5.2% 0.7%  
    Others 29,047 44,173 52.1% 97,204 108,624 11.7%
    % share 9% 12%   9% 10%  
    EBIT margin 10.7% 9.2%   10.2% 3.8%  
    Total Revenue* 340,226 376,115 10.5% 1,053,106 1,129,647 7.3%

    * Excluding inter-segment adjustments & excise duty

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