Buy: L&T
L&T, engineering & construction behemoth, has reported impressive performance for Q3 FY 2008. Net Sales soared up by 55.1% to Rs. 6382.68 crore, buoyed by sizeable capital investment programs and encouraging success achieved in bagging new orders. Share of revenue from international operations constituted 18% of turnover. L&T aims to boost this share to 30% over next few years. However, OPM% @ 10.8% was slightly under pressure due to rising cost structure. 250% jump in interest cost of Rs. 43.84 crore and 47.7% higher depreciation of Rs. 52.7 crore restricted growth in PBT of Rs. 694.62 crore at 34.5%. Nevertheless, lower average tax rate of 30.6% (33.4) lifted PAT up by 40.1% to Rs. 481.79 crore.
For 9 months ending December 2007, Sales soared by 44% to Rs. 16609.5 crore. OPM% enhanced to 10.4%. Thus, efficient execution of large size orders, and improved cost management led to healthy 71.8% spurt in PAT at Rs. 1206.66 crore. Order Inflow at Rs. 30,045 crore grew by > 31%.
L&T is India’s premier engineering and construction (E&C) conglomerate providing it exposure to entire capex cycle in infrastructure and industrial projects. Its dominance in domestic E&C emanates from its strong brand equity, established track record and ability to cater to widest range of segments incl. infrastructure, power, oil & gas, roads, ports and irrigation. It is the only Indian company to offer turnkey EPC services in civil, mechanical, electrical, and instrumentation. It has highly diversified revenue base across products and geographies. Company has entered into joint ventures with leading global players to offer EPC services in segments such as power plants (Sargent & Lundy), hydrocarbon (Chiyoda), and barges / sub-sea pipe laying (Sapura Crest Petroleum).
