Operating profit margin improved to 9% from 4.5% in the December quarter. Total operating revenue growth was at a strong 31%, but that was partly helped by a sharp increase in other operating income and a low base effect
Construction and engineering company Punj Lloyd Ltd has improved its financial performance in the quarter ended March (Q4). The firm reported a consolidated net profit of Rs17.6 crore in the quarter, compared with a loss of Rs300 crore a year ago, and a loss of Rs62 crore in the preceding December quarter. The company posted an operating profit compared with an operating loss for last year’s March quarter. Operating profit margin improved to 9% from 4.5% in the December quarter. Total operating revenue growth was at a strong 31%, but that was partly helped by a sharp increase in other operating income and a low base effect.
For investors, that is where the good news ends.
Excluding the impact of other operating income, operating margin stood at an unimpressive 3.4%, which is flat sequentially. Punj Lloyd’s order book as on 30 May stood at Rs22,800 crore after the company removed inactive orders from strife-torn Libya to the tune of about Rs6,000 crore on which work had not progressed.
However, the order book still includes orders worth Rs3,000-4,000 crore from Libya. Some analysts are sceptical about the revenue contribution in the current fiscal from these Libyan orders.
Further, there is an auditor qualification for assets worth about Rs1,200 crore pertaining to a unit in Libya. “Auditor qualifications have increased to Rs713 crore (excluding Libyan qualifications),” analysts from Angel Broking Ltd wrote in their post-results update.
For fiscal 2011 (FY11), the company has again posted losses, though they have narrowed compared with the previous fiscal. Punj Lloyd maintains that rising commodities and oil prices, increasing interest rates and delays by some clients in providing clearances for work have adversely affected last fiscal’s financial performance.
Moreover, the unrest in Libya and inadequate order booking from the Middle East region have also hurt revenue and profitability.
These concerns, along with the sluggish operating environment in general for infrastructure companies in the form of higher interest rates and commodity prices, have led to a sharp underperformance in Punj Lloyd’s stock in the last fiscal. The stock has declined 65% in FY11.
Given the current state of affairs, there appears little respite for the stock.
(source: Livemint)
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