L&T Q2 results preview: Net profit to see marginal growth; Here’s why

Engineering and construction giant Larsen and Toubro Limited (L&T) will announce its financial results on Wednesday, October 30. According to experts, the engineering conglomerate may report a marginal rise in net profit in the September quarter.

Meanwhile, L&T’s revenue, on the other hand, is expected to see a double-digit growth following order inflows and project executions during the second quarter of FY 2024-25.

Net profit likely to remain flat

According to experts, the second quarter results are expected to remain subdued due to high-cost pressures following a flare-up in commodity prices and lower operating profit and operating margins.

Net profit is expected to rise marginally to ₹2,900 to ₹3,200 crore. L&T reported a standalone net profit of ₹2,710 crore in the same quarter of last year, compared to ₹2,961 crore in the previous quarter.

According to experts, lower operating profit and operating margins may threaten profitability in the second quarter of the current fiscal year.

Q2 revenue is expected to rise 10 to 13%

Revenue from operations is likely to rise nearly 13% in the second quarter following order inflows and project executions. According to experts, the company may report revenue of ₹57,200 crore to ₹57,600 crore for the September quarter.

According to investing.com, Q2 consolidated revenue is estimated at ₹58,186 crore compared to ₹55,120 crore in the quarter ended June 30, 2024.

Experts believe that a strong order book would maintain healthy revenue growth in FY25, which would be supported by a rebound in domestic order inflows after the state polls.

Middle East tensions and state elections may impact near-term performance, but experts say the company’s long-term growth potential stays intact.

Earnings before interest tax depreciation and amortisation (EBITDA) or operating profit may drop by nearly 13% to ₹6,141 crore in the September quarter. Operating margins are expected to drop by 310 basis points to 10.7%.

Key monitorable

Investors will monitor operating margins, order inflow numbers, project pipeline performance, and segment performance during the second quarter of FY25. They will also be keenly watching the company’s commentary on India’s domestic economic activity and government capital expenditure.

L&T posted a 15% rise in Q1 revenue

Larsen & Toubro reported a 15% YoY rise in consolidated revenues to ₹55,120 crore for the quarter ended on June 30, 2024. Robust execution in the Projects & Manufacturing (P&M) portfolio on the back of a large order book drove the growth. International revenues were at ₹26,248 crore, accounting for 48% of the total revenues in Q1 FY25. The company’s consolidated net profit stood at ₹2,961 crore.

The company noted that it retained the focus on the profitable execution of its robust order book in a relatively stable environment. It had mentioned a revival in rural demand, resilient economic activity after general polls, and a rebound in private consumption.

L&T shares trade higher ahead of results

Ahead of the Q2 result announcement, L&T shares are trading flat at ₹3,414 apiece, up 0.98% on the NSE at 11:30 am. The stock has dropped nearly 10% in the past month. Shares of L&T have declined 4.74% so far this year while rising more than 16% in the past year.