MUMBAI (Reuters) - Larsen & Toubro beat forecasts with a 3.3 percent rise in quarterly profit and said infrastructure spending would boost its order book by a quarter this year, sending its shares up nearly 5 percent.
The country’s largest engineering and construction firm’s order book rose by a third in the 2008/09 fiscal year and stood at 703.2 billion rupees ($14.7 billion) by the end of March, which should underpin growth in the coming years.
“Our substantial order backlog will help the company report strong revenues and profits for the next two years,” Executive Vice President R Shankar Raman told Reuters on telephone.
L&T, which operates in industries as diverse as engineering, shipbuilding and software, has been riding a building boom for the past few years as India revamps airports, roads, and adds industrial capacity.
But a global financial crisis has slowed the economy and pressed firms to scale back or suspend expansion plans.
L&T lowered its revenue growth guidance to 15-20 percent for 2009/10 from 25 percent in the previous year.
“We hope the government’s infrastructure focus will translate to orders. Over a three-year spectrum, we see buoyancy returning,” Shankar Raman said.
The company said net profit rose to 9.99 billion rupees ($209 million) in the March quarter from 9.67 billion rupees a year ago. This included a provision of 1.85 billion rupees for its investment in Satyam Computer Services.
Net sales rose to 104.7 billion rupees from 84.7 billion.
A Reuters poll of 13 brokerages had forecast net profit of 9.1 billion rupees, on net sales of 110.59 billion.
Margins in its engineering and construction division, which contributes 80 percent of revenues, rose slightly to 12.9 percent. Margins will sustain around this level, Shankar Raman said.
The company will hold on to its 12 percent stake in outsourcer Satyam Computer as a strategic investment, but has not decided if it will ask for a board seat, he said.
In April, L&T lost out in the race for controlling stake in the fraud-hit outsourcer, which was eventually bought by smaller rival Tech Mahindra. L&T is barred from selling the stake, acquired prior to the bid, for six months.
Shares in L&T, valued at $15.5 billion, gave up gains of 4.75 percent and were trading up 2.2 percent at 1,340 rupees by 0923 GMT in a Mumbai market that was up 1.8 percent.
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