L&T's 10% sales growth in Sep quarter a positive
India’s largest engineering and construction sensex chart company did not play party pooper on Fabulous Friday. On the day the BSE Sensex soared 467 points, Larsen & Toubro (L&T) reported numbers that beat the Street’s estimates on all counts.
From the start of the year, analysts have doubted the company’s ability to grow revenues by 15 per cent in FY14, though order inflows have remained robust through the first half of the financial year. The Street was expecting a dip in profits and operating margins, which fell to 8.3 per cent in the first quarter. There was a reason behind such pessimism, as the company had reported a five per cent buy sell siganls growth in revenues on slower than expected execution.
The firm surprised the Street with a year-on-year (y-o-y) revenue growth of 10 per cent and a 27 per cent jump in order inflows. Almost in response to the market’s quarterly concerns, chief financial officer Shankar Raman said that given the diverse nature of the company’s businesses, it was difficult to assess margins on a quarterly basis.
The company expects the pick-up in revenue growth will continue through the remaining quarters and, as a result, the revenue growth guidance of 15 per cent has not been revised downward, though the sensex chart market is factoring in a 10 per cent growth at best.
The most notable aspect this quarter has been the stellar growth in new orders. The company has reported a y-o-y growth of 27 per cent in these to Rs 26,533 crore during the quarter. The company maintained the order inflows were driven by international orders.
International order inflow more than doubled, contributing 43 per cent of the total, on the back of a few orders for large projects in West Asia. The major orders came from the infrastructure and hydrocarbon segments. The strong flows have helped grow the order book by 11 per cent, to Rs 176,036 crore.
On the downside, though operating margins have come in at 9.7 per cent, the company’s net profit grew by an anaemic seven per cent to Rs 978 crore. The market had factored in a net profit of below Rs 900 crore, so the company has beaten the estimates but the competitive pressures are clearly visible.Analysts say growth in orders is good, but this growth has to be profitable.
No doubt, the firm’s internationalisation strategy has yielded results but it also comes with risks. In the previous quarter, the company had spoken of hiring for projects, which were yet to take off, and so margins were affected. The rupee’s volatility could impact margins, as the company will increase headcount abroad.
Despite the pressures, the company has not revised its revenue growth guidance for the full year, as it expects revenues to pick up in the coming quarters. Going by the steady flow of orders, the nifty live chart markets could revise upwards the stock’s target price but no earnings upgrades are likely just yet.
Chinese shares slipped in volatile trade on Thursday as a further spike in China's money-market rates tempered the effect of a survey showing a pick-up in manufacturing. China's benchmark seven-day repo rates opened up nearly a full%age point at 5% after the central bank let cash drain from the money buy sell trades market for a second week.
The Chinese central bank declined to inject cash for a third day as regulators showed signs of concern that loose liquidity might again be fuelling risky credit growth.
Australian buy sell siganls shares advanced 0.3% and the Australian dollar rose 0.3% to $0.9650 on the day. China is Australia's biggest export market.
China's CSI300 index dipped 0.2% in choppy trade after sliding 2.1% in the previous two sessions, and Hong Kong's Hang Seng Index dropped 0.7%.
Japan's Nikkei share average eased 0.4% in relatively light trade, also hurt by a firmer yen against the dollar.
But MSCI's broadest index of Asia-Pacific buy sell trades shares outside Japan ticked up 0.1%, having fallen 0.9% on Wednesday to end a four-day winning streak.
Financial bookmakers expected major European nifty live chart indexes to open up as much as 0.5%, rebounding from Thursday's decline.
"I wouldn't add on any new positions from here," said Hong Hao, chief strategist at Bank of Communications International Securities.
"Cash demand is going to be high in October because people have to pay taxes and banks have to park reserves with the central bank, but I think people ought to see that the People's Bank of China has already tightened because they have not sold any yuan, allowing the yuan to spike," he added.
"Now with the property restrictions starting to appear, that usually doesn't bode well for the stock market."
Strong new orders drove the fastest expansion in China's manufacturing sector in seven months in October, according to the Markit/HSBC Purchasing Managers' Index, more evidence that the world's second-largest economy is stabilising although a strong rebound remains elusive.
Before the concerns over China checked the market bullishness, global equity markets had been rallying after the resolution of the US budget impasse and on expectations the Federal Reserve would extend its cheap money stimulus into 2014.
After a run of record highs, the US Standard & Poor's 500 index fell 0.5% on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after they reported earnings.
According to Thomson Reuters I/B/E/S, the one-month earning momentum for S&P 500 companies deteriorated to minus 3.6% from minus 1.5% last month.
US S&P E-mini futures added 0.3% in Asian trade on Thursday.
The dollar was at 0.8916 Swiss franc, just above a two-year low of 0.8908 hit on Wednesday. It was holding at 97.375 yen, near a two-week low touched in the previous session.
Against a basket of major currencies, the dollar was down 0.1% at 79.211, within striking distance from an eight-month low of 79.137 touched on Wednesday.
US Treasury yields fell to three-months lows on growing bets that the Fed will maintain its stimulus into next year.
US crude prices climbed 0.6% to about $97.44 a barrel after falling to a 3-1/2 month low of $96.16 on Wednesday.
Gold gained 0.3% to around $1,336 an ounce, recouping some of Wednesday's lost ground.
From the start of the year, analysts have doubted the company’s ability to grow revenues by 15 per cent in FY14, though order inflows have remained robust through the first half of the financial year. The Street was expecting a dip in profits and operating margins, which fell to 8.3 per cent in the first quarter. There was a reason behind such pessimism, as the company had reported a five per cent buy sell siganls growth in revenues on slower than expected execution.
The firm surprised the Street with a year-on-year (y-o-y) revenue growth of 10 per cent and a 27 per cent jump in order inflows. Almost in response to the market’s quarterly concerns, chief financial officer Shankar Raman said that given the diverse nature of the company’s businesses, it was difficult to assess margins on a quarterly basis.
The company expects the pick-up in revenue growth will continue through the remaining quarters and, as a result, the revenue growth guidance of 15 per cent has not been revised downward, though the sensex chart market is factoring in a 10 per cent growth at best.
The most notable aspect this quarter has been the stellar growth in new orders. The company has reported a y-o-y growth of 27 per cent in these to Rs 26,533 crore during the quarter. The company maintained the order inflows were driven by international orders.
International order inflow more than doubled, contributing 43 per cent of the total, on the back of a few orders for large projects in West Asia. The major orders came from the infrastructure and hydrocarbon segments. The strong flows have helped grow the order book by 11 per cent, to Rs 176,036 crore.
On the downside, though operating margins have come in at 9.7 per cent, the company’s net profit grew by an anaemic seven per cent to Rs 978 crore. The market had factored in a net profit of below Rs 900 crore, so the company has beaten the estimates but the competitive pressures are clearly visible.Analysts say growth in orders is good, but this growth has to be profitable.
No doubt, the firm’s internationalisation strategy has yielded results but it also comes with risks. In the previous quarter, the company had spoken of hiring for projects, which were yet to take off, and so margins were affected. The rupee’s volatility could impact margins, as the company will increase headcount abroad.
Despite the pressures, the company has not revised its revenue growth guidance for the full year, as it expects revenues to pick up in the coming quarters. Going by the steady flow of orders, the nifty live chart markets could revise upwards the stock’s target price but no earnings upgrades are likely just yet.
Chinese shares slipped in volatile trade on Thursday as a further spike in China's money-market rates tempered the effect of a survey showing a pick-up in manufacturing. China's benchmark seven-day repo rates opened up nearly a full%age point at 5% after the central bank let cash drain from the money buy sell trades market for a second week.
The Chinese central bank declined to inject cash for a third day as regulators showed signs of concern that loose liquidity might again be fuelling risky credit growth.
Australian buy sell siganls shares advanced 0.3% and the Australian dollar rose 0.3% to $0.9650 on the day. China is Australia's biggest export market.
China's CSI300 index dipped 0.2% in choppy trade after sliding 2.1% in the previous two sessions, and Hong Kong's Hang Seng Index dropped 0.7%.
Japan's Nikkei share average eased 0.4% in relatively light trade, also hurt by a firmer yen against the dollar.
But MSCI's broadest index of Asia-Pacific buy sell trades shares outside Japan ticked up 0.1%, having fallen 0.9% on Wednesday to end a four-day winning streak.
Financial bookmakers expected major European nifty live chart indexes to open up as much as 0.5%, rebounding from Thursday's decline.
"I wouldn't add on any new positions from here," said Hong Hao, chief strategist at Bank of Communications International Securities.
"Cash demand is going to be high in October because people have to pay taxes and banks have to park reserves with the central bank, but I think people ought to see that the People's Bank of China has already tightened because they have not sold any yuan, allowing the yuan to spike," he added.
"Now with the property restrictions starting to appear, that usually doesn't bode well for the stock market."
Strong new orders drove the fastest expansion in China's manufacturing sector in seven months in October, according to the Markit/HSBC Purchasing Managers' Index, more evidence that the world's second-largest economy is stabilising although a strong rebound remains elusive.
Before the concerns over China checked the market bullishness, global equity markets had been rallying after the resolution of the US budget impasse and on expectations the Federal Reserve would extend its cheap money stimulus into 2014.
After a run of record highs, the US Standard & Poor's 500 index fell 0.5% on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after they reported earnings.
According to Thomson Reuters I/B/E/S, the one-month earning momentum for S&P 500 companies deteriorated to minus 3.6% from minus 1.5% last month.
US S&P E-mini futures added 0.3% in Asian trade on Thursday.
The dollar was at 0.8916 Swiss franc, just above a two-year low of 0.8908 hit on Wednesday. It was holding at 97.375 yen, near a two-week low touched in the previous session.
Against a basket of major currencies, the dollar was down 0.1% at 79.211, within striking distance from an eight-month low of 79.137 touched on Wednesday.
US Treasury yields fell to three-months lows on growing bets that the Fed will maintain its stimulus into next year.
US crude prices climbed 0.6% to about $97.44 a barrel after falling to a 3-1/2 month low of $96.16 on Wednesday.
Gold gained 0.3% to around $1,336 an ounce, recouping some of Wednesday's lost ground.
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