Larsen Profit Exceeds Estimates on India Construction Boom
Larsen & Toubro Ltd. (LT), India’s biggest builder of power networks and airports, posted a better- than-expected 43 percent increase in second-quarter profit, helped by higher sales and the sale of a stake in a unit.
Net income rose to 11.4 billion rupees ($213 million) in the three months ended Sept. 30, from 7.98 billion rupees a year earlier, the Mumbai-based company said in a statement today. That exceeded the 8.8 billion-rupee median of 27 analyst estimates compiled by Bloomberg.
Sales rose 17 percent to 132.3 billion rupees, as India’s push to attract $1 trillion of infrastructure spending by 2017 stoked construction of factories, roads and railways. The builder also posted a 2.14 billion rupees gain from selling its plastic machinery business, Chief Financial Officer R. Shankar Raman said at a press conference.
Larsen, the best performer on the BSE India Sensitive Index this year, rose 2.3 percent to 1,671 rupees at close of Mumbai trading. The stock has jumped 68 percent this year while the Sensex gained 22 percent.
The company won 209.7 billion rupees of orders in the quarter, 30 percent more than a year earlier. Its total order book stood at 1.59 trillion rupees as of Sept. 30.
Larsen is on course to meet its target of a 15 percent to 20 percent growth in orders for the fiscal year, Raman said. The company has hired 5,000 people in the past year to executive the projects, he said.
“The rebounding of industrial production and improved credit demand was seen in many sectors towards the end of the quarter,” Larsen said in the statement. “A few steps taken by the government recently underscore its commitment for accelerating the pace of economic development.”
India’s economy expanded 5.5 percent in the quarter ended in June, faster than the three-year low of 5.3 percent in the previous quarter. Prime Minister Manmohan Singh’s government last month eased ownership rules for retailers and airlines as part of efforts to lure investments and boost growth.
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