Larsen & Toubro (L&T) is extremely volatile today after it announced a set of exuberant Q4FY17 numbers and sweetened the pot with a 1:2 bonus.  The stock which had closed yesterday at Rs.1788 zoomed within few minutes of the opening bell to hit a new high at Rs.1834; at this level profit booking came in and the stock slipped into the red, going down almost 2%.

The company, for Q4FY17 reported a 28% (YoY) jump in consolidated net profit at Rs.3180 crore but this was more on the back of higher topline – 12% increase in income from operations at Rs.36,828 crore. A 67% drop in tax expenses at Rs.337 crore also helped but this was nullified to some extent on the exceptional loss of Rs.281 crore. Noteworthy – finance cost was down 32% at Rs.297 crore due to loan repayments & efficient fund management.

L&T’s EBITDA fell 4% at Rs.4335 crore while margins declined 190 bps to 11.8%. Thus more operational efficiency, tax and interest costs did help the bottomline.

The market is beating the stock down because irrespective of the jump in bottomline, it missed its own guidance – it had estimated a 10% increase in revenue for FY18 but in reality it grew 8% and order inflow guidance was given at 10% but it rose 5%.

This has not deterred the management from being robust about FY18 where it has guided a 12% growth in revenue and 12-14% increase in order inflows.