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L&T’s revenue growth for the September quarter was led by its international operations. While the company’s power and heavy engineering segment put up a good show, its infrastructure segment — contributing close to 44 per cent of its revenue and more than 70 per cent of its order book — witnessed a lacklustre performance.
Revenues in the infrastructure segment grew by a modest 6 per cent year-on-year in the September quarter.
The subdued sales were due to delayed client readiness. The segment’s operating margin was also under pressure compared to the same quarter last year. The operating margin dropped to 7.1 per cent in the latest September quarter from 9.3 per cent during the same period a year ago.
However, the power segment continued to witness a good growth momentum.
This was mainly driven by strong project execution in international projects. The revenues for this segment — that contribute about 7 per cent of the company’s consolidated revenues — saw a substantial 30 per cent jump year on year.
Similarly, the revenues for the heavy engineering segment increased 25 per cent compared to the same time period last year. The segment’s good performance was driven by strong execution from PPN power plant, defence and aerospace (D&A) business. This segment turned profitable at the operational level in the September quarter, after reporting loss during the same quarter last year. This improvement was mainly driven by increase in operating efficiencies.
In addition, the hydrocarbon segment showed a remarkable turnaround with a near 33 per cent growth in sales for the September quarter. The margin for this segment also showed a sharp jump from 1.4 per cent last year to 7.1 per cent in the latest September quarter. The trickle-down effect of closure of legacy projects (that suffered considerable losses) in West Asia during the first quarter of this fiscal, boosted the September quarter performance.
Weak industrial activity and delayed execution of realty projects has kept revenue from electrical, automation and other developmental projects depressed.
The order book at the end of September 2016 quarter stood at ₹2,51,800 crore, more than double L&T’s FY-16 revenues of ₹1,01,900 crore.
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