UPDATE:Larsen: Up To INR2B FY Loss Seen On Commodity Hedging

[K.Karthik Raja]

UPDATE:Larsen: Up To INR2B FY Loss Seen On Commodity Hedging
(Updates with more quotes from company official, adds share price)
MUMBAI (Dow Jones)--Larsen & Toubro Ltd. (500510.BY) Monday said
commodity hedging by its subsidiary, L&T International, is likely to
result in losses of INR1.50 billion to INR2.00 billion in the fiscal
year that ends March 31, bringing down its share price sharply. "We
have made losses in the hedging activity, but the profit margins in
the main company has improved," Chief Financial Officer Y. M.
Deosthalee told Dow Jones Newswires. He expects the margin improvement
to continue in the quarter ending June 30. The news brought down the
shares of India's largest engineering and construction company by
sales.
At 0635 GMT, Larsen shares were trading 11.2% lower at INR2,655 on
the Bombay Stock Exchange, while the benchmark 30-stock index, the
Sensex, was down 3.4% at 15,440.73 points.
Deosthalee said Larsen's main business of engineering and
construction will benefit from its hedging activity undertaken by L&T
International, as it safeguards the business from the volatile prices
of the commodities that it uses, such as steel, copper and zinc. "We
are maintaining our sales and order book guidance, and on an EBITDA
(earnings before interest, tax, depreciation, amortization) level we
expect to do better than 12.5%," said Deosthalee.
Earlier in February, Deosthalee said Larsen has raised its revenue
growth target for the current financial year to 35%, driven by the
healthy pace at which it is winning orders. He said new orders is
likely to grow at 30% in the fiscal year. "Overall, we will have
growth in sales, order book and EBITDA margins. We have been able to
manage these commodities, and there is no basic problem at all," said
Deosthalee, adding that hedging losses aren't likely to rise in the
future.