Larsen & Toubro gains 4% after Q2 results, solid order book position

Larsen & Toubro (L&T) shares rose 4% to Rs 1,861 on BSE in Thursday’s intraday trade after the company posted a good operating performance for the quarter ended September 2021 (T2FY22) . The company’s order book remains strong at Rs 3.3 trillion. The stock of construction and engineering majors hit a record high of Rs 1,884.90 on October 19, 2021.

L&T said it received orders worth Rs 42,140 crore in the second quarter of FY22, recording robust growth of 50% from the corresponding period of the previous year. Orders were received in various segments such as oil and gas, subways, rural water supply, minerals and metal, public space, and power transmission and distribution. International orders at 22,116 crore rupees in the quarter accounted for 52% of total new orders, the company said.

On a consolidated basis, adjusted revenue on a comparable basis increased 12% year-over-year (YoY) to Rs 34,773 crore. Profit before interest, taxes, depreciation and amortization (ebitda) margins improved to 11.5 percent, from 10.7 percent a year ago. Consolidated net profit jumped 56% year-on-year to Rs 1,723 crore.

The growth is primarily driven by rising profits from the IT&TS portfolio and improving margins in the project and manufacturing portfolio as the stress induced by the pandemic in previous periods gradually fades away.

Management said the company continues to focus on profitable execution of its large project backlog, capitalizing on strong growth momentum in its IT & TS portfolio, cost optimization measures through automation and the intensive use of digital technologies, the release of funds through better management of working capital. and a gradual divestiture of non-core assets.

“L&T performed decent operationally in the midst of unlocking, while the infrastructure segment saw green shoots with improved margin, productivity and job mix. Stable working capital from sales, reduced debt and improved cash flow situation have provided additional comfort in terms of balance sheet liquidity in these difficult times, ”ICICI Securities said in a note. .

“L&T rightly prioritized balance sheet strength over growth during the second wave of COVID. Labor availability is no longer an issue and execution is expected to improve from then on as construction activity picks up after the monsoon. We believe L&T is poised for strong momentum in earnings growth, if and when the influx of orders picks up. The company has even more asset monetization opportunities to capitalize on, including the sale of Nabha Power, a sale of a stake in L&T IDPL and the monetization of the Hyderabad metro, ”said Motilal Oswal Securities in the update. results day.

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