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Larsen Third-Quarter Net Income Beats Analyst Estimates

Larsen & Toubro Ltd. (LT), India’s biggest builder of power networks and airports, reported profit that beat analysts’ estimates as it tightened project execution costs and won new orders. The shares rose.

Third-quarter net income rose 13 percent to 11.2 billion rupees ($208 million), the Mumbai-based company said in a statement today. That exceeded the 11 billion-rupee median of 33 analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Krishnamurthi Venkataramanan is counting on more orders from utilities and the oil and gas industry as the government seeks to accelerate major projects. Finance Minister Palaniappan Chidambaram said Jan. 22 a new cabinet panel on investment will meet this month as Prime Minister Manmohan Singh seeks to speed up approval of road, rail and other infrastructure.

“The government’s renewed focus on infrastructure upgradation will help builders like Larsen,” Jinal Joshi, a Mumbai-based analyst with BOB Capital Markets Ltd. who recommends buying the stock, said before the results were announced. “It’s no secret we are a power-starved country and Larsen stands to benefit as and when these orders revive because they have the execution skills.”

Larsen shares gained 1.5 percent to 1,585 rupees at the close in Mumbai. The benchmark BSE India Sensitive Index fell 0.5 percent.

Sales Growth

Sales rose 10 percent to 154.3 billion rupees in the three months ended Dec. 31, the company said in the statement. That lagged behind the 161 billion-rupee median of 34 analysts’ estimates compiled by Bloomberg. Larsen won contracts worth 195 billion rupees in the quarter, taking the total order book to 1.62 trillion rupees.

Infrastructure, energy and industrial segments are witnessing a prolonged trough in capital spending, Chief Financial Officer R. Shankar Raman told reporters in Mumbai. Recent policy measures to boost economic expansion are expected to revive investments in various industries, the company said in the statement.

“If you take a long-term horizon of over six to seven months, with all the steps the government is taking, the infrastructure, mining and coal sectors are going to come back into action to feed the power sector,” Venkataramanan said today. “Meanwhile, various aspects of operational excellence and tightening of manufacturing costs is going to help us.”

Raw material costs in the quarter fell 17 percent to 28.2 billion rupees, Larsen said. Administrative and other expenses dropped 35 percent to 4.7 billion rupees.

To contact the reporters on this story: Karthikeyan Sundaram in New Delhi at; Siddharth Philip in Mumbai at

To contact the editor responsible for this story: Anand Krishnamoorthy at

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