L&T posts strong Q3 performance, but execution concern weigh
Larsen and Toubro (L&T) share price fell as much as 2% to Rs 1,334 apiece on BSE today, despite a 5% on-year increase in net profit to Rs 2,467 crore in October-December quarter. However, revenues during the period were slightly lower at Rs 35,596 crore, as Covid-19 restrictions continued to have an impact on project site execution and Hyderabad metro operations.
L&T reported its highest ever fresh order intake in a quarter, which surged 76% on-year to Rs 73,233 crore. While its order book stood at a historic high of Rs 3.13 lakh crore during the quarter under review.
However, the infrastructure services provider has reported a 2% (y-o-y) drop in topline numbers at Rs 35,600 crore. Revenues were down by 28% and 12% in the first and second quarter of FY21, respectively. The drop in revenues in the last few quarters is attributable to lower execution which was hampered by COVID-19 pandemic.
Besides, with weak operations in the Hyderabad metro and rail roko agitation by farmers in Punjab, the company saw a 34% decline in the revenues generated by Developmental Projects segment (contributes less than 2% of consolidated revenues of the company). The segment also saw a drop in operating profit margins to 0.1% from 17.3% in the corresponding quarter last year (owing to lower ridership in Metro services and lower PLF in Rajpura Power station). That apart, the Hyderabad Metro alone resulted in a cash burn of Rs 4,500 crore per quarter, impacting the cashflows of the company.
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