L&T net profit rises 7 pct, beats analyst estimates

Reuters
A Delhi Metro Rail Corporation employee looks through iron rods at the final tunnelling breakthrough of Qutub Minar and Saket stations in New Delhi June 17, 2009. REUTERS/Adnan Abidi/Files
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A Delhi Metro Rail Corporation employee looks through iron rods at the final tunnelling breakthrough of Qutub Minar and Saket stations in New Delhi June 17, 2009. REUTERS/Adnan Abidi/Files

MUMBAI/NEW DELHI (Reuters) - Larsen & Toubro Ltd(NSI:LT.NS - News), India's biggest construction and engineering group, is stepping up efforts to win more orders overseas to hit its annual revenue growth target as a weaker domestic economy keeps a lid on spending on big projects.

Mumbai-based L&T maintained its revenue growth forecast of 15 percent for the current fiscal year to March after reporting on Friday a 7 percent annual rise in recurring net profit for the three months to September 30.

L&T, which lays roads, builds ships, makes power plant equipment and develops real estate, has been looking to boost overseas sales as the domestic economy, where it gets 80 percent of its revenue, grows at its slowest pace in a decade.

Bottlenecks caused by difficulties buying land and high funding costs are also deterring investment.

"At the moment, investment momentum in the Middle East is pretty strong, so our attention has rightly been focused there," Chief Financial Officer R Shankar Raman told reporters after the company released its earnings.

"The domestic market continues to be challenging," he said, adding the company was looking at new markets in countries in Southeast and central Asia and in pockets of Africa.

New orders between July and September grew at an annual rate of 27 percent to 265 billion rupees as international order inflows more than doubled, accounting for 43 percent of total new business, L&T said in a statement.

Overseas contracts won in the quarter include a $1.4 billion project to build bridges, tunnels and stations for a metro line in Saudi Arabia.

L&T, widely seen as a bellwether for India's economy, said recurring net profit rose to 9.78 billion rupees for the three months to September 30 compared with the 9 billion rupees average estimate of nine analysts.

Gross revenue rose 10 percent to 146.48 billion rupees.

Mumbai brokerage Angel Broking said the results were above its expectations and it remained positive on the company.

"We believe L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to its peers," Angel analyst Viral Shah said in emailed comments.

Ahead of the earnings, shares in L&T, valued at $13 billion, jumped 4.2 percent in a Mumbai market that gained 2.4 percent. The shares have lost nearly a fifth of their value in 2013, whereas the benchmark index has gained more than 7 percent.

(Reporting by Prashant Mehra and Devidutta Tripathy; Editing by Christopher Cushing and David Cowell)