Its revenues jumped 11.8 percent to Rs 14,387.5 crore in the quarter ended December 2013, that was limited due to fall in power, and metallurgical and material handling businesses. ( Read More )
In an interview with CNBC-TV18, Viral Shah of Angel Broking, Nitin Bhasin, Analyst - Infrastructure, Cement, Ambit Capital and Chirag Shah of ICICI Securities analyse the financial performance of the company and share their outlook on the stock.
Below is the edited transcript of their interview with CNBC-TV18's Pragya Bhardwaj and Anuj Singhal
Q: What is your first reaction on L&T Q3 numbers?
Shah: The top-line has been a bit disappointing. We were expecting it to be somewhere around Rs 16,665 crore and it has come in around Rs 14,387 crore. While the surprising factor is on the EBITDA margin. We were building it around 10 percent EBITDA margins and margins have come down to 11.1 percent. PAT is higher because of higher other income during the quarter and better than expected EBITDA margins. PAT has come in higher than our estimate. On the bottom-line it is positive, but bad set of numbers.
Q: It looks like shocker in terms of sales and margins have been saving grace. Profit also slightly below but not as much of a shocker as sales.
Bhasin: Yes, fair to say that. The topline is clearly a miss I believe the execution hasn't trickled the way it should have been. Order flows were coming for the last two-three quarters for the company. So, finally the company is catching up to some kind of positive macro woes that we hear right now. However, margin was surprisingly ahead of the street. We were at about 10 percent and they have reported in excess of that, which is a relief but sales execution is a big miss.
Q: This is a 7 percent decline that the company has reported in revenues. To achieve their full year guidance they needed to deliver almost a 20 percent growth for the second half. Do you think their scale down in guidance is now a bigger possibility in the backdrop of these numbers?
Bhasin: Yes and consensus anyways wasn't building in the revenue growth inline with the guidance. We ourselves were closer to not more than 10.5-11 percent topline growth this year. However, Q2 numbers were giving some support, but the street wasn't expecting anything very close to the guidance. So, anyway one can assume that there will be a scale back in guidance.
Q: Do you think there would be a scale back in terms of the guidance and your overall take on the numbers? Prima facie it looks like a big miss.
Chirag: I do not think it is a miss because there is a one-off. The press release states that they have restated their numbers instead of the hydrocarbon subsidy, because if you knock that off from Q3FY13 numbers then the revenues are up 12 percent Y-o-Y. The order inflow numbers are also in line with estimates. EBITDA margin also looks positively surprising for L&T. All in all, I do not believe it is a shocker of a number, because there is a big restatement that has happened in the quarterly accounts of L&T.
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