By Hritam Mukherjee and Manvi Pant
(Reuters) -Larsen & Toubro (L&T), India’s largest infrastructure company by market capitalisation, reported a second-quarter profit jump on Wednesday, helped by faster execution of previously-commissioned projects even as order book declined.
L&T’s results are often seen as a bellwether for infrastructure spending in Asia’s third-largest economy, mainly due to the diverse nature and scale of its projects.
The company’s consolidated profit after tax jumped 5% on-year to 33.95 billion rupees (about $404 million) in the three months ended Sept. 30.
This missed Prabhudas Lilladher’s estimate of 35.9 billion rupees, Amit Anwani, research analyst at the brokerage said.
The company’s project execution improved as the pace of construction during July and August rose 8.5% on-year, brokerage Elara Capital said, citing data from the country’s roadways ministry.
L&T’s consolidated revenue rose 21% to 615.55 billion rupees.
Besides India, which contributes about half of its revenue, L&T counts the Middle East as a key market and also operates in the United States, Europe and Africa.
International revenue grew 46%, contributing 52% to the topline in the second-quarter, compared to a 43% share a year earlier.
Demand in the Middle East remains strong on increased investments in industrial and energy transition sectors even as disruptions in the Red Sea continue to affect trade, the company said in a statement.
L&T’s order book fell 10% during the September quarter, caused by a spike in orders a year earlier, when the order book had surged 72%.
Total expenses swelled 21% to 571.01 billion rupees, leading to a contraction in its core profit margin to 10.3% from 11% a year ago.
“Pressure on margins have been persisting from the preceding quarter due to labour shortage, execution of legacy orders and higher-than-normal rainfall,” Prabhudas Lilladher’s Anwani said.
($1 = 84.0640 Indian rupees)
(Reporting by Hritam Mukherjee and Manvi Pant in Bengaluru; Editing by Sumana Nandy and Mrigank Dhaniwala)
