L&T topline, margins below estimate: Viral Shah, Angel Broking

In a chat with ET Now, Viral Shah, Sr. Research Analyst, Angel Broking, shares his views on the L&T numbers. Excerpts:



ET Now: What explains these numbers because they have come way off from what the market was expecting both from the top as well as the bottom line?

Viral Shah: See, what I can understand from the results that the top line has come below estimate. We had expected around Rs 13100 crore of top line while the top line has come in at Rs 12555 crore. So, top line has been disappointing. I believe the margins also would be disappointing, but I am not sure about the EBITDA margin numbers. In fact, I do not have it right now.



ET Now: The order book has come in at Rs 1.65 lakh crore and the PAT has come in at 756 thereabouts.



Viral Shah: I guess that the lower EBITDA margins may have been mainly because of execution coming in lower, but I do not have the EBITDA numbers. So I cannot comment on the margins.

ET Now: They have come in at 8.5%. So even EBITDA margins seem to be below what we were expecting. We were hoping it would come in around the 9.5% mark, but EBITDA margins have come in at 8.6%.

Viral Shah: Yes, as I told you, EBITDA margins would be disappointing because the execution has been lower. We had expected around Rs 13100 crore of the top line and top line has come in at Rs 12555 crore. So obviously there is a disappointment in EBITDA as well.



ET Now: Which division do you think could have led to this poor performance? Do you think we could have seen slower growth in the E&C division or do you think the heavy engineering and E&E growth would have been sluggish? From your analysis what could be the main pain points this quarter?

Viral Shah: It is very difficult to say that currently. If we have more numbers and once I go through them, I can throw some more light on that.



ET Now: Your call on the stock now because that is the big question really. How much more downside can we expect? The stock has already hit its lowest since June 28, we have seen a fair amount of weakness on the counter. How much more downside can we expect?

Viral Shah: From a long-term perspective, it is a good stock. This is one of the best stocks to play in the infra space basically. From a short-term perspective, we expect to correct more from this level. The number is very difficult to judge, but we expect some bottom line, some correction in the stock because of the result mainly.