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1227.00 -8.2 (-0.66%)
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Code: 500510
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Code: LT
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Larsen & Toubro gains as Q2 profit meets forecasts

SI Reporter / Mumbai 23 Nov 16 | 10:04 AM

A man waits at a bus-stop with an advertisement of Larsen & Toubro outside the company's manufacturing unit in Mumbai

Larsen & Toubro (L&T) was up 4% to Rs 1,385 on the BSE in intra-day trade after the company reported 84% year on year (YoY) growth in consolidated net profit at Rs 1,435 crore for the quarter ended September 30, 2016 (Q2FY17).

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India’s largest engineering and construction company posted profit of Rs 778 crore in the same quarter last year.

A big part of this growth was on account of exceptional gains of Rs 402 crore arising out of stake sale in subsidiary company. Net profit before exceptional items was 41% higher at Rs 1,030 crore against Rs 730 crore reported in the year-ago quarter.

Despite above-expected Q2 earnings, brokerage Religare Securities maintained ‘sell’ rating on the stock with a target price of Rs 1,075 (Rs 1000 earlier).

“While H1FY17 order inflow growth of 11.5% YoY is a positive, we remain suspect of the profitability of orders being secured. Also, LT faces an uphill task of funding IDPL losses and divestiture of low-return businesses," the brokerage said.

Meanwhile, the company's consolidated revenue from operations came in 8% higher at Rs 25,011 crore from Rs 23,123 crore reported a year ago.

Analysts on an average had expected profit of Rs 882 crore on revenues of Rs 23,697 crore for the quarter.

EBITDA (earnings before interest, taxes, depreciation and amortization) margin remained unchanged at 9.2%.

Margin improvement mainly driven by heavy engineering, hydrocarbon and services businesses, L&T said in a statement.

The company remains confident of meeting its annual growth target for revenue and order inflow, even though the business environment continues to be challenging.

At 10:02 am; the stock was up 4% to Rs 1,382 on BSE as compared to 0.08% decline in the S&P BSE Sensex. A combined 1.84 million shares changed hands on the counter on BSE and NSE so far.

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