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L&T: Amidst a Challenging Business Environment - Views on News from Equitymaster
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L&T: Amidst a Challenging Business Environment
Aug 1, 2017

Larsen & Toubro (L&T) has announced first quarter results of financial year 2017-2018 (1QFY18). The company has reported 9.7% YoY growth in sales while profits have grown 45% YoY. Here is our analysis of the results.

Performance summary
  • Consolidated net sales for the company grew by 9.7% YoY during 1QFY18.
  • Operating expenses for the company increased at the same pace. Consequently, operating margin remained at the same level as the corresponding quarter of last year at 8.6%.
  • A fall in effective tax rates contributed to the net profit growing by 45% YoY during the quarter.

    Financial performance snapshot (Consolidated)
    (Rs m) 1QFY17 1QFY18 Change
    Sales 218,738 239,898 9.7%
    Expenditure 199,848 219,331 9.7%
    Operating profit (EBDITA) 18,890 20,567 8.9%
    Operating profit margin (%) 8.6% 8.6%  
    Other income 3,058 3,849 25.9%
    Interest 3,248 3,651 12.4%
    Depreciation 4,648 5,513 18.6%
    Exceptional items      
    Profit before tax 14,052 15,253 8.5%
    Tax 5,488 4,597 -16.2%
    Extraordinary items, net of tax 0 0  
    Profit after tax/(loss) 8,564 10,655 24.4%
    Net profit margin (%) 3.9% 4.4%  
    Share in profit of associates -1,736 -372  
    Minority interest 693 1,403  
    Profit after share of associates & minority interest 6,135 8,880 44.7%
    Other comprehensive income -1,196 1,561  
    Total income 4,940 10,442 111.4%
    No. of shares   1,400.1  
    Basic reported earnings per share (Rs)*   44.9  
    P/E ratio (x)*   26.4  
    *on a trailing twelve month basis

    Segment wise performance (Consolidated)
    (Rs m) 1QFY17 1QFY18 Change
    Infrastructure 92,875 107,284 15.5%
    % share 41% 43%  
    EBIT margin 7.3% 6.5%  
    Power 17,227 17,643 2.4%
    % share 8% 7%  
    EBIT margin 5.2% 0.7%  
    Heavy Engineering 7,338 7,313 -0.3%
    % share 3% 3%  
    EBIT margin 9.1% 9.6%  
    Electrical & Automation 10,812 12,684 17.3%
    % share 5% 5%  
    EBIT margin 3.3% 6.2%  
    Hydrocarbons 21,457 25,492 18.8%
    % share 9% 10%  
    EBIT margin 0.4% 5.6%  
    IT & Technology Services 23,749 25,663 8.1%
    % share 10% 10%  
    EBIT margin 19.2% 19.2%  
    Financial Services 20,907 22,945 9.7%
    % share 9% 9%  
    EBIT margin 11.6% 15.6%  
    Developmental Projects 13,831 12,599 -8.9%
    % share 6% 5%  
    EBIT margin 7.1% -3.9%  
    Others 18,181 17,538 -3.5%
    % share 8% 7%  
    EBIT margin -4.0% -2.9%  
    Total Revenue* 226,378 249,160 10.1%
    *Excluding inter-segment adjustments % excise duty
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Oct 18, 2017 (Close)

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