L&T

The capital goods giant surprised everyone by beating all estimates and posting a robust set of numbers for Q2FY13. Little wonder then that the stock yesterday hit  a new 52-week high at Rs.1674.20. The topline grew 17.34% (YoY) at Rs.13195 crore  and net profit was up 42.5% at Rs.1137 crore. The bottomline git two boosters, apart from the rise in revenue – an exceptional gain of Rs.214 crore on divestment in its arm and extraordinary gain of Rs.53 crore due to sale of Satyam shares. This was partly offset by a forex loss of Rs.33 crore. The market was enthused with the growth in operating margin, which QoQ rose from 9.1% to 10.7%. And the most encouraging fact was that its order inflow rose 30% on a YoY at Rs.20,967 crore and was sequentially up 7%. Its order book at end of current Q1 stood at Rs.1.53 lakh crore and now, at end of Q2, stands at 1.59 lakh crore and of this 12% came in was international while Engineering and Construction (E&C) segment garnered the maximum orders at Rs.19,136 crore. It expects to end FY13 with an order size of around Rs.80-84,000 crore.

The company has been giving very pessimistic forward looking statements for some time now. But this time around, the management has shown optimism and stated that despite the challenging circumstances, there was a revival in industrial production and better credit demand across most sectors. In terms of segmental revenue, E&C remains the biggest contributor, around 87% to the topline. E&C revenue at Rs.11669 crore was up 10% (QoQ).  Electrical and Electronics (E&E) rose 16% and Machinery and Industrial products (MIP) revenue, which had been down in Q1, has grown 9% in current Q2. In terms of EBIT too, all segments have grown (QoQ), with E&C growing from 9.4% to 11%, E&E grew from 5.3% to 8.2% though MIP went down to 12.52% from 13.49%. Looking ahead, PSU order inflows are expected to go up during the fiscal, mainly orders coming in from Metro, corridor projects and other infra projects. Expect better mix going forward.