* Q3 net profit 8.67 bln rupees
* Exec says FY15 order growth 15-20 pct
* Shares close down 6.6 pct (Adds CFO quotes, details)
By Tommy Wilkes and Aman Shah
NEW DELHI/MUMBAI, Feb 9 (Reuters) - Indian industrial group Larsen & Toubro Ltd (L&T) on Monday reported a smaller than expected rise in third-quarter profit and said a recovery in its domestic business was up to a year away, sending its shares around 7 percent lower.
The company, which makes a range of goods from submarines and metro lines to oil pipelines, is considered an indicator of the health of the Indian economy.
Chief Financial Officer R. Shankar Raman told journalists the company was cautious about the rate of growth for this fiscal year despite improving domestic sentiment, since investment momentum was yet to recover strongly.
"India Inc, while it continues to be aspiring, is still on the wait and watch mode, waiting for these (government) policies to become sustainable businesses opportunities," Raman said.
"It's going to be a bit of a mixed bag for at least three to four quarters from this point onwards."
The company expects its order book to grow by between 15 and 20 percent for the fiscal year ending March 31, against a prior target for a 20 percent rise in new orders.
L&T said it made a consolidated net profit of 8.67 billion rupees ($140 million) in the three months ended Dec. 31, against an average analyst forecast of 11.47 billion rupees, according to Thomson Reuters data.
L&T said revenue in its power, metallurgical, heavy engineering and hydrocarbons businesses fell during the quarter, although that was offset by rising infrastructure orders.
Across its businesses, fresh orders for the quarter stood at 34.6 billion rupees, up 19 percent year-on-year thanks to the infrastructure orders.
Abhineet Anand, an analyst at Quant Broking Pvt Ltd, said the results showed L&T was "still not seeing a significant improvement in sales" despite signs of a recovery in India's economy and the central bank cutting interest rates last month.
CFO Raman said he expected L&T's customers in the Middle East to "reevaluate" some of their investment programmes. The firm generates much of its hydrocarbon revenues in the Middle East, where a decline in oil prices has taken its toll on the region's economies.
Shares in L&T ended the day down 6.6 percent.
The stock has rallied almost 50 percent since January 2014, outpacing a 35 percent gain in the benchmark equities index , as investors bet the company would benefit from an economic recovery.
$1 = 62.1600 Indian rupees Editing by Gopakumar Warrier and Mark Potter