Updated February 1st, 2024 at 07:42 IST
L&T drops after Q3 profit misses expectations, warns of potential rise in logistics costs
The fall in shares came in the wake of the company reporting a third-quarter profit that fell short of expectations.
Shares of Larsen and Toubro dropped 7 per cent decline on Wednesday, marking its most notable drop in eight months.
The fall in shares came in the wake of the company reporting a third-quarter profit that fell short of expectations. Adding to investor concerns, L&T issued a cautionary note regarding potential increases in logistics expenses.
This projection stemmed from disruptions in the Red Sea shipping lane, attributed to attacks by Iranian-backed Houthi rebels in the Suez Canal. The canal serves as the shortest sea route connecting Asia and Europe.
L&T, which heavily relies on international markets for approximately 44 per cent of its revenue, specialises in providing capital goods like machinery, equipment, vehicles, and tools for various infrastructure projects.
In the latest quarter, L&T's profit failed to meet market forecasts, marking the first instance after three consecutive quarters of surpassing estimates.
The shortfall was partially attributed to the government's austerity measures on infrastructure spending in the run-up to national elections.
The decline in L&T's stock value by 6.5 per cent also exerted downward pressure on the benchmark Nifty 50 index.
Notably, L&T had experienced a robust 16 per cent surge in the December quarter, outperforming the Nifty 50's gain of nearly 11 per cent.
Published January 31st, 2024 at 10:33 IST