Engineering major Larsen & Toubro booked fresh orders worth Rs 15,800 crore in the second quarter of the current year, lower than the Rs 19,600 crore it booked in the previous quarter.

Equity analysts at Kotak Institutional Equities Research have taken note of an interesting feature of Q2 order bookings — 44 per cent of them (Rs 6,900 crore) are from urban real estate, mostly ‘residential’.

Of the Rs 15,800 crore, Rs 2,200 crore has come from ‘water’ and Rs 1,600 crore from power transmission and distribution.

L&T had previously said its current year order bookings would be between Rs 80,000 crore and Rs 85,000 crore.

“We believe that L&T enjoys a sweet spot in urban real estate with developers having an opportunity to boost project credentials by using L&T as construction contractor. However, we believe that urban real estate has its own risks related to clearances, completion timelines and finances of developers,” says Kotak.

 Analysts have also noted that 17 per cent of the Rs 1,53,100-crore order backlog at the end of the first quarter are in-house orders and “difficult to replace”. They see a slowdown of business that give rise to in-house orders, such as road and metro projects. As such, L&T would have to replace these orders with non in-house orders which may be difficult in a “slow capex environment”.

 L&T’s turnover in 2011-12 was Rs 53,171 crore. It has a vision to reach Rs 100,000 crore by 2016. The company’s five-year corporate plan, Lakshya 2016, envisions that overseas orders will make up a fourth of the turnover by 2016 — from 15 per cent now. However, international orders have accounted for only around 10 per cent of the fresh order inflows.

 On the BSE today, the L&T share closed at Rs 1,613.20.

  ramesh.m@thehindu.co.in

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