L&T Q1 preview: Profit likely to rise multifold YoY but may halve sequentially

Nomura India noted that execution weakened for the engineering, procurement and construction (

) companies like L&T during the June quarter, but would appear strong optically on a weak year-ago base that was impacted by a nationwide lockdown. It believes the recent restrictions due to the second Covid wave would impact companies such as L&T with exposure to Covid-hit states such as Maharashtra.

“We expect (L&T) Ebitda margin to weaken sequentially due to sharp increase in commodity prices. Working capital levels will be a key observable. However, the financials will likely continue to be impacted by losses from Hyderabad Metro on a YoY basis,” it said.

Motilal Oswal projected L&T’s profit at Rs 1,451.50 crore, up 1,108.70 per cent YoY. Edelweiss pegged it at Rs 1,554 crore, up 1,197 per cent YoY. “L&T’s core E&C business is expected to grow 82 per cent YoY on a base of 46 per cent YoY decline in Q1FY21. Consolidated top line growth at 50 per cent YoY would be on the back of a 28 per cent degrowth in the base quarter last year. Margins will be far better (YoY) given the better recoveries and execution. However, it will be marginally lower against recurring levels,” Edelweiss said.

HDFC Institutional Equities sees the profit figure at Rs 1,490 crore. It expects sales to rise 52.4 per cent YoY (down 32.6 per cent QoQ) to Rs 32,390 crore. Ebitda margin is seen expanding 353 basis points to 11.2 per cent. It could be down 213.4 basis points sequentially, the brokerage said. Kotak Institutional Equities pegged profit at Rs 1,432.80 crore, down 57.80 per cent sequentially. Sales are seen rising 41.6 per cent YoY to Rs 30,109 crore, but down 37.4 per cent over March quarter’s Rs 48,087 crore.

“We expect 61 per cent YoY improvement in core EPC revenues and build in a 13 per cent decline on a two-year basis. We factor in some disruptions due to the Covid second wave till H1FY22 although we expect the impact to be modest versus the first wave,” it said.