Larsen & Toubro (L&T) has cut its fiscal 2014 guidance for growth in order inflows to 15% from the target of 20% set at the beginning of the year, mainly due to slow and non movement of projects in many sectors.
Shankar Raman, chief financial officer, L&T, said, “We are at about Rs 67,000 crore as of today and to reach that (20%) guidance we need to do about Rs 30,000 crore in the fourth quarter.”
Considering the country is got into election mode and industrial investments waiting for political outcome, L&T could possibly end the year with 15% growth in order inflow over the previous fiscal, he said.
“There is fighting chance of meeting 15% revenue guidance. Obviously, this is not something that one can sit back and take for granted. We have to work very hard in the last quarter to make sure we get there,” said Raman.
He said there are five road projects that are not moving.
“These projects were expected to be resolved by September, but the matter has not moved much.
Consequently, we will have to rework the math. About 4% of the order book is locked into road projects that are slow moving,” he said.
Similarly, a couple of orders in the power sector and minerals and metals have not moved during the course of the year. In all, Raman said, about 8-9% of the Rs 171,000 crore L&T order book could remain slow moving or non-moving by the end of the year.
“Having said that we still haven’t received any cancellations from the customers hence will have to wait till fiscal end to take a final call on the same,” said Raman.
The company on Tuesday reported a 10.60% rise in standalone net profit at Rs 1,240.70 crore for the quarter ended December 31, while its net sales rose 11.80% to Rs 14,387.51 crore. The net profit and revenue figures exclude the hydrocarbon business as it was demerged during the quarter.
Q3 order Inflow at Rs 21,722 crore grew 21% over year-ago period while order book at Rs 171,184 crore grew 13% yoy. International orders constituted 15% of the total order book.
Viral Shah, senior research analyst–infrastructure, Angel Broking, said the healthy growth in revenues was mainly driven by strong execution in the engineering and construction, and execution pick-up in international orders. “The company is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance-sheet and cash flow generation as compared with its peers.”