L&T joins the downturn
ECONOMY & POLICY

L&T joins the downturn

Larsen & Toubro has finally caught up with the ongoing downturn in India's infrastructure and industrial sector. For the first time in Q2FY21, it registered a net loss on a standalone basis, excluding one-time gains from asset sales. The core business of engineering, construction, and manufacturing remains a drag at the consolidated or group level, and L&T now makes money from its IT services subsidiaries rather than its core business. L&T announced a loss from the continued option of Rs 1,767 crore

Larsen and Turbo observed that the effect of the pandemic on the lower revenue of higher credit provision in the sector of financial services and the disruption of metro services led to a decrease in profits, its current value in the market stock is falling rapidly. The stock fell to hit a low of 938.60 on BSE.

The rapid fall of L&T shares from its recent highs is the alignment with the main Market Corrections. Nifty has been updated almost 7% - 8% from the 11,600 stages of India's main benchmark index. Therefore, there is a higher selling demand amongst financial stocks and blue-chip securities, considering the recent decline in the overall market.

Government expenses, in the event of dampened private investment. To upbeat the stagnant mood, government capital expenditure (Capex) comes into effect. The current high fiscal deficit can create funding restrictions on government spending.

Despite the high capex target of Rs 111 lakh crore, the gap between the planning and implementation of these proposed infrastructure projects is considerably large.

This is because funding for the implementation of proposed projects is currently a key problem for the government. Therefore, the wide gap in Infra project planning-execution is a significant challenge for the infrastructure sector and unfavourable for L&T, as most of the L&T projects come from the government and due to improper management system, there is a delay in payments.

Existing labour costs increased due to the lack of labour after the recent Reverse Migration. Also, Operating profit margins are hindered by rising overall operating costs. As a result, reduced operating profit margins have severely hurt the profitability of the business.

They did not give guidance in the previous two quarters owing to the uncertain environment. Therefore the stakeholders are anticipating to see if things are looking up any time soon. The company provides guidance but remember two quarters before Q3 of FY20 the management had maintained order inflow guidance at 10-12% and revenue guidance at 12-15%.

Larsen & Toubro has finally caught up with the ongoing downturn in India's infrastructure and industrial sector. For the first time in Q2FY21, it registered a net loss on a standalone basis, excluding one-time gains from asset sales. The core business of engineering, construction, and manufacturing remains a drag at the consolidated or group level, and L&T now makes money from its IT services subsidiaries rather than its core business. L&T announced a loss from the continued option of Rs 1,767 crore Larsen and Turbo observed that the effect of the pandemic on the lower revenue of higher credit provision in the sector of financial services and the disruption of metro services led to a decrease in profits, its current value in the market stock is falling rapidly. The stock fell to hit a low of 938.60 on BSE. The rapid fall of L&T shares from its recent highs is the alignment with the main Market Corrections. Nifty has been updated almost 7% - 8% from the 11,600 stages of India's main benchmark index. Therefore, there is a higher selling demand amongst financial stocks and blue-chip securities, considering the recent decline in the overall market. Government expenses, in the event of dampened private investment. To upbeat the stagnant mood, government capital expenditure (Capex) comes into effect. The current high fiscal deficit can create funding restrictions on government spending. Despite the high capex target of Rs 111 lakh crore, the gap between the planning and implementation of these proposed infrastructure projects is considerably large. This is because funding for the implementation of proposed projects is currently a key problem for the government. Therefore, the wide gap in Infra project planning-execution is a significant challenge for the infrastructure sector and unfavourable for L&T, as most of the L&T projects come from the government and due to improper management system, there is a delay in payments. Existing labour costs increased due to the lack of labour after the recent Reverse Migration. Also, Operating profit margins are hindered by rising overall operating costs. As a result, reduced operating profit margins have severely hurt the profitability of the business. They did not give guidance in the previous two quarters owing to the uncertain environment. Therefore the stakeholders are anticipating to see if things are looking up any time soon. The company provides guidance but remember two quarters before Q3 of FY20 the management had maintained order inflow guidance at 10-12% and revenue guidance at 12-15%.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code