In the last six months, the Larsen & Toubro (L&T) share has fallen 32 per cent, even as the broader market is down 11 per cent. The company had initially expected a 15 per cent growth in order flows but toned it down to five per cent later. Here is a sneak peek into what top research and brokerage houses expect from the company in the December 2011 quarter.



Given the weak industrial activity and continued deferrals across infrastructure verticals, Edelweiss Securities expects the sector to post a decline in order intake across verticals (barring power T&D) which should impact overall sector’s revenue growth visibility. Despite overall slowdown, they expect a reasonable revenue growth of ~12-13% for the sector led by L&T, BHEL, among others. They further expect a decline of ~150bps in the margins and expect the sector’s profitability to remain negative owing to continued impact of input cost, interest rates and pricing pressure in power, hydrocarbons etc.


The company has not won a single BTG order in YTDFY12. Moreover, a large order of 3x660 MW from JP Karchana won in FY11 remains a non-starter, states a Kotak Securities report. While announcing the Q2FY12 numbers, the company had lowered its guidance for order intake from 15-20% to 5%. In recent weeks, the top management, while highlighting the depressed market conditions, had hinted at a possibility of missing out on the revised guidance. The management also shared its FY13 outlook and guided for flat order intake.


Angel Broking expects Larsen and Toubro (L&T) to report revenue of Rs 12,171 crore, registering 6.6% y-o-y growth. This subdued growth is on account of high base (3QFY2011 reported top-line growth of 40.5% y-o-y). They expect OPM to be flat at 11.1% and project net profit at Rs 866.6 crore, marginally up 3.1% y-o-y. “The company would end the quarter with a total order inflow of around Rs 10,000 crore An important thing to watch out for would be management's commentary on the outlook for the sector and how things pan out on the margin front going ahead. We do not expect INR depreciation to have a major impact on L&T's margins (L&T has foreign currency loans), given the company generates decent revenue from its international operations," they mentioned in a report.


Analysts at Emkay will closely monitor the management's comment on order inflow outlook along with guidance for FY13E.


Motilal Oswal, too, cut their consolidated earnings estimates by 4% for FY12 and by 7% for FY13. "We are reducing our order intake assumptions by 10% for FY12 and by 16% for FY13 to factor in the deteriorating economic environment and the company's loss of market share in key segments like power and hydrocarbons. We project order intake at INR757b for FY12, down 5%." We expect revenue to grow 20% y-o-y in Q3FY12, driven by healthy execution on the back of strong order book. In FY12, they expect the revenue to grow 22%. On a standalone basis, they estimate revenue CAGR growth of 15% and PAT CAGR of 10% over FY11-13. We estimate consolidated EPS at Rs 76 for FY12 and Rs 83 for FY13," stated a report.