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L&T: Transition Challenges Continue to Have an Effect - Views on News from Equitymaster
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  • Nov 15, 2017 - L&T: Transition Challenges Continue to Have an Effect

L&T: Transition Challenges Continue to Have an Effect
Nov 15, 2017

Larsen & Toubro (L&T) has announced second quarter results of financial year 2017-2018 (2QFY18). The company has reported 5.7% YoY growth in sales while profits have grown 27% YoY. Here is our analysis of the results.

Performance summary
  • Consolidated net sales for the company grew by 5.7% YoY during 2QFY18.
  • Operating expenses for the company increased at a slower pace. Consequently, operating margin increased compared to the corresponding quarter of last year to touch 11.2%.
  • Lower depreciation charges along with a fall in effective tax rates further contributed to the net profit growing by 27% YoY during the quarter.

    Financial performance snapshot (Consolidated)
    (Rs m) 2QFY17 2QFY18 Change 1HFY17 1HFY18 Change
    Sales 250,223 264,468 5.7% 468,961 504,366 7.5%
    Expenditure 227,072 234,863 3.4% 426,920 454,194 6.4%
    Operating profit (EBDITA) 23,151 29,604 27.9% 42,041 50,172 19.3%
    Operating profit margin (%) 9.3% 11.2%   9.0% 9.9%  
    Other income 4,518 4,013 -11.2% 7,576 7,861 3.8%
    Interest 3,396 3,929 15.7% 6,644 7,579 14.1%
    Depreciation 4,602 4,306 -6.4% 9,249 9,819 6.2%
    Exceptional items 4,024 1,367 -66.0% 4,024 1,367 -66.0%
    Profit before tax 23,696 26,750 12.9% 37,747 42,002 11.3%
    Tax 6,807 5,439 -20.1% 12,295 10,037 -18.4%
    Extraordinary items, net of tax 0 0   0 0  
    Profit after tax/(loss) 16,888 21,310 26.2% 25,452 31,966 25.6%
    Net profit margin (%) 6.7% 8.1%   5.4% 6.3%  
    Share in profit of associates -1,567 -1,107   -3,303 -1,480  
    Minority interest 975 2,004   1,707 3,362  
    Profit after share of associates & minority interest 14,346 18,199 26.9% 20,442 27,124 32.7%
    No. of shares         1,400.6  
    Basic reported earnings per share (Rs)*         49.0  
    P/E ratio (x)*         24.7  

    (*on a trailing twelve month basis)


    Segment-wise performance (Consolidated)
    (Rs m) 2QFY17 2QFY18 Change
    Infrastructure 115,969 119,887 3.4%
    % share 45% 44%  
    EBIT margin 5.6% 6.1%  
    Power 17,446 16,673 -4.4%
    % share 7% 6%  
    EBIT margin 2.4% 4.7%  
    Heavy Engineering 8,082 12,111 49.9%
    % share 3% 4%  
    EBIT margin 9.9% 10.4%  
    Electrical & Automation 12,518 13,093 4.6%
    % share 5% 5%  
    EBIT margin 9.8% 11.4%  
    Hydrocarbons 25,007 25,614 2.4%
    % share 10% 9%  
    EBIT margin 5.7% 9.7%  
    IT & Technology Services 24,617 27,238 10.7%
    % share 10% 10%  
    EBIT margin 18.3% 19.5%  
    Financial Services 21,400 24,130 12.8%
    % share 8% 9%  
    EBIT margin 16.9% 12.5%  
    Developmental Projects 10,726 14,157 32.0%
    % share 4% 5%  
    EBIT margin 9.9% 26.7%  
    Others 21,927 18,452 -15.8%
    % share 9% 7%  
    EBIT margin 3.0% 8.7%  
    Total Revenue* 257,692 271,355 5.3%

    * Excluding inter-segment adjustments & excise duty

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