India’s largest engineering and construction company, Larsen & Toubro (L&T), on Monday reported a 12.5% year-on-year decline in net profit to Rs. 756 crore during the April-June quarter against Rs. 864 crore a year ago on the back of subdued revenue growth.
This points to more speed bumps ahead for India’s construction sector as the economic slowdown takes a toll on infrastructure spending.
The results, which missed analyst estimates of Rs. 950 crore, sent the company’s shares down 7.5% to Rs. 902 on the BSE.
Revenue was hit by a 44% fall in the power business segment to Rs. 1,275 crore and an 18% fall in metallurgical and material handling businesses to Rs. 1,087 crore.
“The fact is the situation is very challenging on the ground," said Krishnamurthi Venkataramanan, CEO, L&T. “The situation, for the next two years, looks challenging from the Indian context.”
However, revenue from the infrastructure business grew 22% to Rs. 5,461 crore, while that from the hydrocarbon business was up 24% at Rs. 2,776 crore.