By Sethuraman N R and Hritam Mukherjee
NEW DELHI/BENGALURU (Reuters) -India’s Larsen & Toubro said on Wednesday it was well placed to surpass its 10% annual order growth forecast, after its second-quarter profit rose on stronger execution of overseas orders and consistent order inflows.
L&T, seen as a bellwether for India’s infrastructure sector, has been trying to win more overseas orders to hedge risks from a relatively weaker domestic market.
“We continue to witness higher capex spends, in both our primary geographies of India and the Middle East, and remain fairly optimistic about order prospects,” Chairman and Managing Director S N Subrahmanyan said.
L&T’s total orders rose 45% year-on-year in the reported period, compared with the 33% growth in the first quarter and a 10% decline a year earlier.
“We find that both private sector capital as well as infrastructure investments have shown an uptick. We do believe that the trend would continue going forward,” L&T’s finance chief R Shankar Raman said in a post-earnings call.
International orders comprised 65% of the total, up from 63% a year earlier.
L&T’s consolidated profit after tax rose 16% to 39.26 billion rupees ($446.7 million) while revenue rose 10% to 679.84 billion rupees. The share of international revenue expanded to 56% from 52% a year earlier.
However, a 10.4% rise in total expenses – mostly led by sub-contracting charges – squeezed margins. L&T’s core profit margins contracted to 10% from 10.3% a year earlier.
L&T also said it is considering to expand its coal Boiler-Turbine-Generator making capacity beyond 6 gigawatts (GW) to capitalise on high demand. Its present capacity is 4 GW and had previously planned to expand it to around 5-6 GW.
($1 = 87.8950 Indian rupees)
(Reporting by Manvi Pant and Hritam Mukherjee in Bengaluru, and Sethuraman NR in New Delhi, Editing by Sonia Cheema, Janane Venkatraman and Krishna Chandra Eluri)
