Jan. 23 (Bloomberg) -- Larsen & Toubro Ltd., India’s biggest builder of power networks and airports, posted a better-than-expected third-quarter profit as it won more projects and boosted income from financial investments.
Net income rose 18 percent to 9.92 billion rupees ($198 million) in the three months ended Dec. 31, from 8.41 billion rupees a year earlier, the company said in a statement today. That beat the 8.69 billion-rupee median of 23 analyst estimates compiled by Bloomberg.
Larsen aims to boost business in the hydrocarbon and infrastructure sectors in the Middle East and South East Asia as higher costs and a slowing economy affect projects at home. The company, which cut its order-book growth forecast in October, is sticking to that projection as it hasn’t had any cancellations, said R. Shankar Raman, chief financial officer.
“We’re going to see improvement in infrastructure starting with softening of interest rates,” said Amit Srivastava, a Mumbai-based analyst at Nirmal Bang Institutional Equities. “It’s a good time for investing in infrastructure companies and L&T is definitely in a better position.”
Growth in India’s industrial production slowed to 3.8 percent in the eight months to November, compared with 8.4 percent in the same period a year earlier, as the nation’s central bank raised interest rates 13 times since March 2010. The Reserve Bank of India will keep the repurchase rate at 8.5 percent at its review tomorrow, according to all 20 economists polled in a Bloomberg News survey.
Larsen rose 0.2 percent to 1,277.30 rupees, the highest since Dec. 7, at the close in Mumbai trading, reversing an earlier drop of as much as 3.8 percent. The benchmark Sensitive Index gained 0.1 percent. Larsen slumped 50 percent in 2011.
Other income, including gains from financial investments, during the quarter surged 79 percent to 4.49 billion rupees. New contracts in the period gained 28 percent to 171 billion rupees, Larsen said in the statement.
Sales in the quarter rose 23 percent to 140 billion rupees and total order book reached 1.46 trillion rupees as of Dec. 31. In the year ending March 31, sales may increase 25 percent, Raman said at a press conference today.
The company, based in Mumbai, expects to win orders worth 300 billion rupees in the fourth quarter, he said. Credit Suisse Group AG said Jan. 4 that Larsen has to earn new orders worth 299 billion rupees in the period to meet its 5 percent order-inflow growth guidance.
“The environment is getting challenging and the economy is moving slowly,” Raman said. “So it’s going to be tough and challenging to lift the order book.”
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