The December quarter results of infrastructure company Larsen & Toubro Ltd (L&T) were a mixed bag, with both hits and misses.

Indeed, the results negated investors’ primary concerns on order flows, which at ₹41,579 crore were a tad higher year-on-year (yoy) and better than brokerage estimates of about ₹36,000 crore.

Yet, this is not to say that all is well at the company. The quarter’s performance portrays the slow pace of capital expenditure both by the government and private sector. The impact of lower tax collections, fiscal slippages and prolonged liquidity crunch is evident from the 20% yoy drop in fresh domestic orders. Fortunately, international orders rose sharply and more than made up.

Further, in spite of its humongous ₹3.1 trillion order back log, L&T’s 6% yoy revenue growth during the quarter was way below the street’s forecast of a 15% growth. This appears to be in-line with the company’s philosophy of focusing on cash flow efficiencies instead of pressing the pedal on execution only to drive revenues.

Other infrastructure firms too have echoed the slowdown in customer payments that is leading to a slower pace of execution. The 5% decline in L&T’s infrastructure segment revenue therefore mirrors these woes in the domestic economy.

“The liquidity crunch is hampering execution in L&T’s core infrastructure segment, which may not ease in the near term," says Umesh Raut, analyst- industrials, Yes Securities Ltd. Some analysts reckon that even the current growth has been helped by L&T’s balance sheet strength. The company, they feel, has supported some customers with softer credit terms, in order to push orders to completion. It is not surprising that the working capital in the nine months ended 31 December has jumped to 23.5% from 19.6% in the year-ago period - clearly a trade-off to push execution.

Meanwhile, the power and heavy engineering segments continue to be a drag on operating performance of the company, while defence and hydrocarbons fared better. The strain in its core infrastructure segment trickled down to operating profit, which at ₹4,118 crore rose 10% yoy but was about 7% below Bloomberg’s consensus. The silver lining is the 50 basis points increase in operating margin from the year-ago period. One basis point is one hundredth of a percentage point.

To be sure, the overall macroeconomic gloom has weighed on the L&T stock. At the current market price of ₹1,294, it trades at one-year forward price-to-earnings multiple of 15 times. This is below its decadal average of 20 and factors in the prolonged slowdown in domestic economy, which investors foresee would worsen in the quarters ahead. That said, the fact that L&T’s management has not cut its FY20 guidance for either order flows or revenue could lift the sombre mood on the street, at least for the near term.