Views on Larsen & Toubro 3QFY2016 Results: Angel Broking

Views of Mr. Santosh Yellapu (Sr. Research Analyst - Infrastructure, Angel Broking) on Larsen & Toubro 3QFY2016 Results:

"Larsen & Toubro (L&T; standalone entity) reported bad set of numbers for 3QFY2016, both at the top-line and the bottom-line level. The company reported YoY top-line de-growth at 1.5% YoY to INR14,774cr (vs. our expectation of 6% YoY growth). Revenue de-growth on YoY basis is owing to lower revenue booking across Infrastructure and Metallurgical & Material Handling segments. The disappointment continued further towards the EBITDA level; the company reported a 368bp YoY decline in EBITDA margin to 6.8%. Revenue de-growth and 38.0% YoY increase in sales, admin and other expenses, led to EBITDA margin compression. During the quarter, L&T reported gain from stake sale in subsidiary and associate company to the tune of INR 92cr. Adjusting for the same, Adj. PAT of the company were at INR 791cr. Adj. PAT was also impacted due to muted other income, which declined 0.8% YoY to INR 617cr.

For 3QFY2016 L&T reported consol, order inflows of INR 38,500cr. L&T in order to attain its revised flattish Order inflow guidance for FY2016 needs to report ~INR 61,900cr in 4QFY2016. This translates to asking rate of 30% order inflows growth in 4QFY2016, which in our view is very challenging.

Even though there have been delays on the awarding front, we believe in the Indian Infra growth story. Given the company's market positioning, we expect L&T to be well positioned and to gain from an expected gradual recovery in the capex cycle, given its exposure to a range of sectors, and better cash flow generating potential vis-a-vis its peers. We maintain our positive view on L&T; and maintain our BUY rating on the stock."

Shares of LARSEN & TOUBRO LTD. was last trading in BSE at Rs.1102.2 as compared to the previous close of Rs. 1077.15. The total number of shares traded during the day was 399107 in over 16935 trades.

The stock hit an intraday high of Rs. 1108 and intraday low of 1070.05. The net turnover during the day was Rs. 434820611.

Source : Equity Bulls

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