L&T Q3 preview: PAT growth seen slowest in 3 quarters, order inflows outlook key

Operational performance is also seen improving sequentially on the back of cooling commodity prices. Operating profit is seen rising over 18% YoY to Rs 5,363 crore.

However, the growth in the topline is likely to have slowed down a bit from the preceding two quarters. After reporting more than 20% year-on-year (YoY) growth in revenue for 2 straight quarters, the growth is likely to have slowed down to 16% in the December quarter.

An ET Now poll sees L&T reporting a consolidated revenue of Rs 45,882 crore compared with Rs 39,563 crore a year ago.

Similarly, the net profit is predicted to have grown in single digits after 3 consecutive quarters of strong double digit growth. ET Now poll sees L&T reporting a net profit of Rs 2,615 crore, up 5% from the year-ago period.

Consolidated order book as on September 30 stood at Rs 3.7 lakh crore. The company had bagged orders worth Rs 51,914 crore in the quarter, which was 23% higher YoY.

L&T, often referred to as a proxy to India’s infrastructure story, has been a star performer, having given double digit returns in 2022 and outperformed the Nifty 50 by a wide margin. In this month so far, even as the benchmark has shed about 3%, L&T has gained by the same quantum. The management’s outlook for orders, particularly from the government side, will be closely tracked by investors. This year will be critical from a government-spend perspective given that general elections are scheduled to take place in 2024.

Here’s breaking down analyst expectations on earnings:

Kotak Equities
The brokerage expects 9% YoY improvement in core EPC revenues on improved construction activity across projects during the quarter. Announced order inflows for the quarter so far includes large and mega order inflows from high speed rail, metals and mining segment.

It expects core E&C business’ EBITDA margin at 8.6%, up by 50 bps QoQ. It expects sequential improvement in margins, driven by lower commodity prices.

Prabhudas Lilladher
The brokerage expects consolidated revenue growth of 15% YoY, led by growth in IT, infrastructure, and hi-tech manufacturing segments.

Strong tendering pipeline from domestic as well as export markets are likely to drive order inflows.

During the quarter, L&T announced orders in range of Rs 215-3655 billion.

Management’s commentary on metro ridership and financial restructuring will be key monitorables for the brokerage.

ICICIdirect
During Q3FY23, EPC order inflows announced by L&T were in the range of Rs 20500-34000 crore across railway, hydrocarbon, power T&D, water treatment, heavy engineering, buildings & factories segments, indicating strong order inflows for the quarter amid a challenging environment.

The brokerage expects decent execution pick-up YoY. Working capital and cash flow management will be key monitorables for the brokerage. Consequently, it expects adjusted standalone revenue to grow 13.9% to Rs 29,226 crore. EBITDA is expected to grow 18.8% to Rs 2,425.8 crore, with margins expected to be at 8.3%, owing to better execution.

Adjusted PAT is expected to grow 12.9% to Rs 2059.2 crore, adjusted for lower interest expense and lower tax.

Nuvama Equities
With government capex/initiatives showing strong momentum, private capex might see some challenges given macro issues. FY26 strategic plan is in focus on making subsidiaries self-sustainable, entry into green energy (hydrogen, battery storage etc.) and non core exits.

With robust order inflow growth, commodity prices cool-off, margins may see expansion in H2FY23.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)