Engineering & construction major Larsen & Toubro (L&T) on Wednesday declared a special dividend of Rs 18 per share as it looked to distribute a part of the proceeds from the Schneider Electric deal to its shareholders. However, the dividend amount came at the lower end of analyst estimates.

L&T which declared its results for the quarter ended September 30 saw a 45 per cent decline in its consolidated net profit to Rs 1,410.29 crore compared with Rs 2,551.67 crore in the same period of the previous year.

While this number was slightly ahead of analyst estimates, L&T said the bottomline was impacted by the pandemic in terms of lower revenue, higher credit provisions in the financial services business and disruption of the metro services.

It, however, pointed out that labour at various project sites have reached near pre-Covid levels that led to project execution gathering momentum compared with the preceding three months.

Investors were more eager about the special dividend from L&T, with the stock under-performing over the past few months. L&T had announced last Friday its plan for a special dividend that led to the counter rallying on the bourses.

In May 2018, Schneider Electric along with Singapore’s state investment firm Temasek Holdings had announced an all-cash buyout of L&T’s electrical and automation business for Rs 14,000 crore.

Analysts had estimated the net proceeds to the company would be around Rs 12,000 crore (post tax) and a part of this would be distributed to shareholders. Estimates on how much of this will be paid as special dividend ranged from Rs 18 per share to 38 per share. At its meeting on Wednesday the board of L&T declared a special dividend of Rs 18 per share — or 900 per cent on face value of Rs 2 each. The dividend outgo is estimated at Rs 2,500 crore.

“The special dividend could be a long awaited trigger for the stock. It addresses a key capital allocation issue as it effectively rules out large one-time equity infusion for the Hyderabad Metro,” Nomura had said. The brokerage had estimated a payout of Rs 35 per share.

During the period, the company recorded consolidated gross revenues of Rs 31,035 crore.

It added that revenue declined 12 per cent over the same period last year because of the lingering impact of the pandemic during the quarter. International revenue during the quarter at Rs 12,148 crore constituted 39 per cent to the total revenue.

According to L&T, cash generation from operations was robust during the quarter which was strongly supplemented by proceeds from the divestment of the electrical & automation business.

The company bagged orders worth Rs 28,039 crore at the group level in the period registering a sequential improvement of 19 per cent over previous quarter, but a decline of 42 per cent over the previous year, on account of deferment of award decisions largely caused by the pandemic.