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L&T: Profits Led by Divestment Gains - Views on News from Equitymaster
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L&T: Profits Led by Divestment Gains
Nov 24, 2016

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.

Performance summary
  • Consolidated net sales for the company grew by 8.5% YoY during 2QFY17.
  • Operating expenses for the company increased by 8.2% YoY. Operating profit grew 11.4% YoY in 2QFY17 as a result. Consequently, operating margin expanded to 8.9% from 8.6% in the corresponding quarter of last year.
  • Net profit grew by 84% YoY during the quarter.

    Financial performance snapshot(Consolidated)
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Sales 229,765 249,240 8.5% 428,422 466,426 8.9%
    Expenditure 209,925 227,130 8.2% 393,997 426,817 8.3%
    Operating profit (EBDITA) 19,840 22,110 11.4% 34,426 39,609 15.1%
    Operating profit margin (%) 8.6% 8.9% 8.0% 8.5%
    Other income 4,686 5,680 21.2% 9,344 10,255 9.7%
    Interest 4,388 3,517 -19.9% 8,281 6,892 -16.8%
    Depreciation 5,286 4,602 -12.9% 9,944 9,249 -7.0%
    Exceptional items 457 4,024 780.8% 457 4,024 780.8%
    Profit before tax 15,310 23,695 54.8% 26,002 37,747 45.2%
    Tax 5,347 6,807 27.3% 9,629 12,295 27.7%
    Extraordinary items, net of tax 0 0 0 0
    Profit after tax/(loss) 9,963 16,888 69.5% 16,373 25,452 55.5%
    Net profit margin (%) 4.3% 6.8% 3.8% 5.5%
    Share in profit of associates -1,669 -1,567 -3,632 -3,303
    Minority interest 510 975 768 1,707
    Profit after share of associates & minority interest 7,784 14,346 84.3% 11,973 20,442 70.7%
    Other comprehensive income -1,576 782 -1,636 -374
    Total income 6,208 15,128 143.7% 10,337 20,068 94.1%
    No. of shares 932.4
    Basic reported earnings per share (Rs)* 55.0
    P/E ratio (x)* 24.7

    (*on a trailing twelve month basis)


    Segment-wise performance (Consolidated)
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Infrastructure 111,777 115,969 3.8% 196,820 208,845 6.1%
    % share 46% 45% 44% 43%
    EBIT margin 7.2% 5.6% 7.1% 6.3%
    Power 13,399 17,446 30.2% 24,187 34,673 43.4%
    % share 6% 7% 5% 7%
    EBIT margin 3.8% 2.4% 1.7% 3.8%
    Heavy Engineering 6,217 8,082 30.0% 12,661 15,420 21.8%
    % share 3% 3% 3% 3%
    EBIT margin -16.9% 9.9% -6.4% 9.5%
    Electrical & Automation 13,183 12,518 -5.0% 24,323 23,330 -4.1%
    % share 5% 5% 5% 5%
    EBIT margin 9.3% 9.8% 5.9% 6.8%
    Hydrocarbons 18,959 25,007 31.9% 40,504 46,463 14.7%
    % share 8% 10% 9% 10%
    EBIT margin -0.8% 5.7% 0.0% 3.3%
    IT & Technology Services 22,702 24,617 8.4% 43,335 48,366 11.6%
    % share 9% 10% 10% 10%
    EBIT margin 17.1% 18.3% 16.4% 18.7%
    Financial Services 18,911 21,400 13.2% 36,728 42,308 15.2%
    % share 8% 8% 8% 9%
    EBIT margin 15.9% 17.4% 13.2% 14.8%
    Developmental Projects 11,458 10,726 -6.4% 22,841 24,558 7.5%
    % share 5% 4% 5% 5%
    EBIT margin 2.5% 9.9% 3.2% 8.3%
    Others 23,867 21,812 -8.6% 45,090 39,993 -11.3%
    % share 10% 8% 10% 8%
    EBIT margin 10.0% 3.0% 8.7% -0.2%
    Total Revenue* 240,473 257,576 7.1% 446,488 483,954 8.4%

    * Excluding inter-segment adjustments & excise duty

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