High interest rates fail to dent L&T profit
The company’s net profit stood at Rs 502 crore during the first quarter of this fiscal as against Rs 377 crore in the same period of previous year.business Updated: Jul 28, 2008 20:45 IST
Engineering and construction giant Larsen and Toubro has reported 33 per cent growth in quarterly profits as it could sustain a continuous order inflow despite higher inflation and interest rates expected to adversely impact construction and infrastructure spaces.
The company’s net profit stood at Rs 502 crore during the first quarter of this fiscal as against Rs 377 crore in the same period of previous year. Total revenues stood at Rs 6,993 crore, up 53 per cent over the corresponding quarter of the previous year.
L&T said the measures and strategies taken by the company to counter inflation and changing economic conditions were expected to help sustain the profitability.
“The robust order book of the company provides healthy sales growth visibility over the next one to two years,” L&T said in a statement. The company has won orders worth over Rs 56,340 crore during the quarter ended June 30, 2008. The order inflow witnessed a 28 per cent increase compared to last year.
Though L&T could sustain the growth momentum, analysts say infrastructure and power sectors were already in trouble and would continue to face problems in the construction space as well.
“Important growth areas such as infrastructure and power sector are already facing problems in attaining financial closure,” said Tushar Poddar, vice president, Asia Economic Research, Goldman Sachs. “The critical construction sector will also face the impact of higher rates and lower demand.”
L&T shares went up Rs 97.95 or 3.73 per cent to close at Rs 2,723.55 at the Bombay Stock Exchange on Monday.