Mumbai, January 30, 2024 :
Another Quarter of Robust Performance
Order Inflow ↑25%, Revenue ↑19% & Recurring PAT ↑20%
Larsen & Toubro achieved Consolidated Revenues of ₹ 55,128 crore for the quarter ended December 31, 2023 recording a y-o-y growth of 19%, aided by ramp up in execution of the strong order book in the Projects and Manufacturing portfolio. International revenues during the quarter at ₹ 24,300 crore constituted 44% of the total revenue.
For the nine months ended December 31, 2023, the Consolidated Revenues at ₹ 154,034 crore recorded a y-o-y growth of 23% with international revenues during the nine months at ₹ 65,220 crore constituting 42% of the total.
The Company for the quarter ended December 31, 2023, reported a Consolidated Profit after Tax (PAT) of ₹ 2,947 crore, registering growth of 15% compared to the corresponding quarter of the previous year. Further, when compared to recurring profit of the corresponding quarter of the previous year, Profit after Tax registered an impressive growth of 20%.
Similarly, for the nine months ended December 31, 2023, Consolidated Profit After Tax at ₹ 8,663 crore, registered a growth of 34% y-o-y basis. The Company received orders worth ₹ 75,990 crore at the group level during the quarter ended December 31, 2023, registering a robust growth of 25% on y-o-y basis. During the quarter, orders were received across various businesses like Offshore vertical of Hydrocarbon, Solar EPC & Power Transmission, Water Utilities, Buildings & Factories and Minerals & Metals sectors. International orders at ₹ 50,562 crore during the quarter comprised 67% of the total order inflow.
On a cumulative basis, the order inflow for the nine months ended December 31, 2023 stood at ₹ 230,662 crore, registering a growth of 49% over the corresponding period of the previous year. International orders at ₹ 137,894 crore during the nine months constituted 60% of the total.
The consolidated order book is at ₹ 469,807 crore as on December 31, 2023, with international orders having a share of 39%.
Commenting on the results, S.N. Subrahmanyan, Chairman and Managing Director said:
“We have registered yet another quarter of strong performance, despite the headwinds from a volatile global environment and consequent supply chain constraints. Our nine month order inflow has crossed the FY’23 level. This is a testament to our wide capability spectrum, diversified presence, financial strength and most importantly the faith reposed in us by our customers.
During the quarter ended December 2023, we made a foray into fabless semiconductor chip design. Our bold strides in new age sectors, including Digital Platforms, Data Centres, and Green Energy will pivot us into a technology – led conglomerate.
Further, we are committed to promoting sustainability by reducing fossil fuel dependence / exposure, tapping renewables opportunities, using recyclable materials, increasing wastewater recycling, integrating ESG into business initiatives, and collaborating with vendors to build a green supply chain.
We are currently witnessing improved Capex spends in both our primary geographies of India and Middle East. Despite continued global macroeconomic and geopolitical volatility we remain positive about the investment spends continuing in the medium term.”
Infrastructure Projects Segment
The Infrastructure Projects segment secured order inflow of ₹ 43,208 crore, during the quarter ended December 31, 2023, registering healthy growth of 33% y-o-y basis with receipt of marquee orders mainly in Power Transmission and Distribution business. International orders at ₹ 27,230 crore constituted 63% of the total order inflow of the segment during the quarter.
The segment order book stood at ₹ 317,693 crore as on December 31, 2023, with the share of international orders at 28%.
The segment posted customer revenues of ₹ 27,845 crore during the quarter ended December 31, 2023, registered a y-o-y growth of 27% aided by robust execution momentum from a growing order book. International revenues constituted 29% of the total customer revenue of the segment during the quarter.
The EBITDA margin of the segment during the quarter ended December 31, 2023 was at 5.5% vis-à-vis 7.0% recorded in the corresponding quarter of the previous year. Margin for the quarter reflects continuing cost pressures in a few legacy projects that are now nearing completion.
Energy Projects Segment
The Energy Projects segment secured orders valued at ₹ 13,281 crore during the quarter ended December 31, 2023, registering 47% growth on y-o-y basis with receipt of a mega order in Offshore vertical of Hydrocarbon business. International order inflow constituted 93% of the total order inflow during the quarter.
The segment order book stood at ₹ 112,777 crore as on December 31, 2023, with the international order book constituting 81%.
The segment achieved customer revenues of ₹ 7,864 crore during the quarter ended December 31, 2023, recording growth of 24% over the corresponding quarter of the previous year, majorly attributed to planned execution ramp up in international projects in the Hydrocarbon business. International revenues had a share of 63% of the total customer revenues for the quarter.
The EBITDA margin of the segment at 9.7% for the quarter ended December 31, 2023 improved compared to 8.7% over the corresponding quarter of the previous year, mainly on account of job savings in Hydrocarbon and customer claim settlements in the Power business.
Hi-Tech Manufacturing Segment
The Hi-Tech Manufacturing segment secured orders valued at ₹ 2,043 crore during the quarter ended December 31, 2023 registering marginal growth of 6% y-o-y. Export orders constituted 15% of the total order inflow of the segment during the quarter. The order book of the segment was at ₹ 25,758 crore as on December 31, 2023, with the share of export orders at 8%.
The segment posted customer revenues of ₹ 2,066 crore for the quarter ended December 31, 2023, registering a growth of 23% over the corresponding quarter of the previous year, with improved project execution. Export sales comprised 33% of the total customer revenues for the quarter.
The EBITDA margin of the segment at 16.7% for the quarter ended December 31, 2023 is marginally lower compared to 17.5% reported in the corresponding quarter of the previous year, reflecting the stage of execution of jobs.
IT & Technology Services (IT&TS) Segment
The segment recorded customer revenues of ₹ 11,196 crore for the quarter ended December 31, 2023, registering a modest y-o-y growth of 5%, reflecting growth headwinds in the IT&TS sector. International billing contributed 93% of the total customer revenues of the segment for the quarter ended December 31, 2023. The aggregated revenue of the two listed subsidiaries (LTIMindtree and L&T Technology Services) in this segment at USD 1,374 Mn registered y-o-y growth of 5% in USD terms.
The EBITDA margin for the segment was at 20.7% for the quarter ended December 31, 2023 as compared to 18.9% in the corresponding quarter of the previous year. The improved segment margin reflects better resource utilization and operational efficiencies.
Financial Services Segment
The segment reflects the performance of L&T Finance Holdings (LTFH), a listed subsidiary. The segment recorded income from operations at ₹ 3,407 crore during the quarter ended December 31, 2023, registering growth of 2% y-o-y basis, mainly attributed to higher disbursement in retail business, in line with its strategy of retailisation of the loan book. The Retail loan book now constitutes 91% of the total loan book as on December 31, 2023. The total Loan Book is at ₹ 81,780 crore in December 2023 vs ₹ 80,893 crore in March 2023. The segment PBT for the quarter ended December 31, 2023 increased to ₹ 824 crore as compared to ₹ 630 crore in the corresponding quarter of the previous year due to improving NIMs and lower provision of credit costs attributable to improved asset quality.
Development Projects Segment
The segment recorded customer revenues of ₹ 1,220 crore during the quarter ended December 31, 2023, registering growth of 10% compared to corresponding quarter of previous year, driven by improved PLFs in Nabha power and higher ridership in Hyderabad Metro.
The segment EBIT for the quarter ended December 31, 2023 was at ₹ 118 crore as compared to a loss of ₹ 6 crore during the corresponding quarter of the previous year, primarily due to increase in ridership in Hyderabad Metro and consolidation of profits of Nabha Power.
“Others” Segment
“Others” segment comprises (a) Realty (b) Industrial Valves (c) Construction Equipment & Mining Machinery and (d) Rubber Processing Machinery.
Customer revenues during the quarter ended December 31, 2023 at ₹ 1,530 crore registered growth of 12% y-o-y, mainly contributed by higher handover of residential flats in the Realty business. Export sales constituted 13% of the total customer revenues of the segment during the quarter, majorly relating to Industrial Valves and Rubber Processing Machinery businesses.
The EBITDA margin of the segment at 24.4% for the quarter ended December 31, 2023 registered growth, compared to 21.6% reported in the corresponding quarter of the previous year was mainly aided by higher handover of flats in Realty business.
Note:
The key parameters of the Group and Segment Performance for the quarter and nine months ended December 31, 2023, are shown in Annexure 1.
Outlook
The Indian economy is expected to grow by a healthy 7%+ in FY’24 with better capacity utilization in manufacturing sector, buoyancy in real estate, healthy corporate balance sheets, strong credit momentum, higher tax collections. Lastly, an acceptable level of inflation is aiding the growth prospects of the Indian economy.
On the back of a large and growing domestic market, a young workforce, steadfast policy emphasis on education reforms & upskilling, manufacturing, tech-enabled governance, infrastructure development and enhanced regional connectivity, the Indian economy offers significant opportunities in the medium to long term. The country’s robust economic trajectory is underpinned by resilient growth from sustained capex spend by the government. However, with the general elections around the corner, expected to be scheduled anytime between April-May 2024, the public capex spend could witness a temporary slowdown.
The global economy remains volatile with continuing military engagement in Europe and West Asia, disrupting the supply chain and global trade movements. The US economy has been resilient so far, but the UK and European economies are weak and the concern around China persists. On the positive side though, some easing of recent headline inflation numbers has led to expectations of an early end to monetary policy tightening cycle, thereby shoring up market sentiments. Middle East, particularly Saudi Arabia, continues to pursue its ambitious growth plans in both energy and other sectors.
In this backdrop, the Company possesses the necessary capability and flexibility to continuously rebalance its approach and strategy to benefit from the dynamic business environment. The Company is focused on tapping emerging opportunities both in India and overseas with its proven competence in the domains of engineering, manufacturing, construction, project management and services for profitable execution of its large Order Book. As it has always been, the Company continues to remain committed to creating sustainable long-term returns for its stakeholders.
Background:
Larsen & Toubro is a USD 23 billion Indian multinational engaged in EPC Projects, Hi-Tech Manufacturing and Services. It operates in over 50 countries worldwide. A strong, customer–focused approach and the constant quest for top-class quality have enabled L&T to attain and sustain leadership in its major lines of business for eight decades.
Financial Results Q3 2023-24