L&T`s future prospects are looking good, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, “ L&T , entire focus has shifted on the order inflow which is quite satisfactory. However, if you take a call on the Rs 19500 crore order, you need to subtract Rs 4000-4500 crore. I have not been able to understand the commentary of the management saying that order inflow can be easily coming in the road sector. Does it mean that if the cancellations will happen then only they will hunt for the orders? So, this is a bit confusing and maybe net basis this should be taken as Rs 15000 order inflow only.”
He further added, “If I go by their E&C business, their machine industrial product division has performed very well. If you see the EBIT has doubled over sequentially and that has made the EBITDA margin to move to about 9.6 percent. So, there are concerns and disappointment on the E&C business which is their core business contributing 90 percent to their topline where we have seen a fall of about 160 basis point sequentially so I will take that as a cause of concern. But because generally in case of few companies we take a narrow focus, here in case of the order inflow, I am not saying that order inflow is not the basic criteria, that is very important but we need to see that link with the margin also and L&T has always been able to hold the margins in double digit in their E&C business because their electrical and end-to-end (not sure) business has been contributing very low, machine and industrial product division has been contributing very low. Electrical division is contributing less than Rs 1000 crore on a QoQ basis and machinery industrial product less than Rs 600 crore. So, I am bit disappointed on the margin front but let us see because the road ahead seems to be good for the company and Q4 always sees robust numbers coming in from the company. So, yes overall one can say that little disappointment on their margin but overall the future seems to be good and intact.”
He further added, “If I go by their E&C business, their machine industrial product division has performed very well. If you see the EBIT has doubled over sequentially and that has made the EBITDA margin to move to about 9.6 percent. So, there are concerns and disappointment on the E&C business which is their core business contributing 90 percent to their topline where we have seen a fall of about 160 basis point sequentially so I will take that as a cause of concern. But because generally in case of few companies we take a narrow focus, here in case of the order inflow, I am not saying that order inflow is not the basic criteria, that is very important but we need to see that link with the margin also and L&T has always been able to hold the margins in double digit in their E&C business because their electrical and end-to-end (not sure) business has been contributing very low, machine and industrial product division has been contributing very low. Electrical division is contributing less than Rs 1000 crore on a QoQ basis and machinery industrial product less than Rs 600 crore. So, I am bit disappointed on the margin front but let us see because the road ahead seems to be good for the company and Q4 always sees robust numbers coming in from the company. So, yes overall one can say that little disappointment on their margin but overall the future seems to be good and intact.”
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