Mumbai, October 31, 2023 :
Larsen & Toubro achieved Consolidated Revenues of ₹ 51,024 crore for the quarter ended September 30, 2023 recording a y-o-y growth of 19%, primarily aided by improved execution of the large order book and accelerated progress in the Projects and Manufacturing portfolio. International revenues during the quarter at ₹ 21,898 crore constituted 43% of the total revenue.
Record Order Inflow to steer Revenue expansionOrder Inflow ↑ 72%, Revenue ↑ 19%, PAT ↑ 45%Successful completion of the first ever Buyback
For the half-year ended September 30, 2023, the Consolidated Revenues at ₹ 98,906 crore recorded a y-o-y growth of 26% with international revenues during the half-year at ₹ 40,921 crore constituting 41% of the total.
The Company for the quarter ended September 30, 2023, posted a Consolidated Profit After Tax (PAT) of ₹ 3,223 crore, registering a significant growth of 45% compared to the corresponding quarter of the previous year.
Similarly, for the half-year ended September 30, 2023, Consolidated Profit After Tax at ₹ 5,716 crore, registered a growth of 45% y-o-y basis.
The Company received orders worth ₹ 89,153 crore at the group level during the quarter ended September 30, 2023, registering a robust growth of 72% on y-o-y basis. During the quarter, orders were received across diverse segments like Onshore verticals of the Hydrocarbon business, Urban Transit systems, Transmission & Distribution as well as Residential & Commercial Space. International orders at ₹ 59,687 crore during the quarter comprised 67% of the total order inflow.
On a cumulative basis, the order inflow for the half-year ended September 30, 2023 stood at ₹ 154,672 crore, registering a growth of 65% over the corresponding period of the previous year. International orders at ₹ 87,333 crore during the half-year constituted 56% of the total.
The consolidated order book is at ₹ 450,734 crore as on September 30, 2023, with international orders having a share of 35%.
“Our strong operating and financial performance this quarter exhibits the resilience of the Company’s business model despite the on-going volatile geo-political situation. All our businesses – Projects, Manufacturing and Services have grown. During the quarter, we have received the highest ever order inflows in the history of the Company. This shows the faith our customers place on us and is a reflection of our capability to perform and deliver projects on time. The Company now tops the list of international EPC Contractors working in the MENA region in terms of value for projects under execution. This is a testament to our capabilities as a diversified conglomerate present across various geographies.
The Company has successfully completed the first ever Buyback of Equity Shares during the quarter, in alignment with our long-term Lakshya 2026 plan to enhance shareholder value.
In the near term, we remain cautiously optimistic, considering the recent geopolitical developments. However, we do expect sustained buoyancy of Services and Indian Government’s thrust on capex to continue.”
Infrastructure Projects Segment
The Infrastructure Projects segment secured order inflow of ₹ 27,990 crore, during the quarter ended September 30, 2023, registering growth of 12% y-o-y basis on receipt of some large value orders across the various sub-segments. International orders at ₹ 6,775 crore constituted 24% of the total order inflow of the segment during the quarter.
The segment order book stood at ₹ 304,497 crore as on September 30, 2023, with the share of international orders at 23%.
The segment posted customer revenues of ₹ 24,613 crore during the quarter ended September 30, 2023, registered a y-o-y growth of 27% aided by execution of projects across various sites. International revenue constituted 28% of the total customer revenue of the segment during the quarter.
The EBITDA margin of the segment during the quarter ended September 30, 2023 was at 5.4% vis-à-vis 6.6% recorded in the corresponding quarter of the previous year. Margin for the quarter is a function of job mix and legacy Covid jobs nearing completion.
Energy Projects Segment
The Energy Projects segment secured orders valued at ₹ 40,141 crore during the quarter ended September 30, 2023, registering a substantial growth y-o-y basis with receipt of two ultra-mega international orders in the Onshore vertical of Hydrocarbon business. International order inflow constituted significant portion of the total order inflow during the quarter.
Energy Projects Segment order book crossed ₹ 100,000 crore for the first time ever, taking the segment order book to ₹ 106,802 crore as on September 30, 2023, with the international order book constituting 79%.
The segment achieved customer revenues of ₹ 6,788 crore during the quarter ended September 30, 2023, recording growth of 22% over the corresponding quarter of the previous year largely attributed to pickup of execution momentum in few international projects in the Hydrocarbon business. International revenues had a share of 58% of the total customer revenues for the quarter.
The EBITDA margin of the segment at 9.5% for the quarter ended September 30, 2023 improved compared to 8.5% over the corresponding quarter of the previous year, mainly on account of execution cost savings in certain projects in Hydrocarbon and a favorable mix of job progress in Power projects.
Hi-Tech Manufacturing Segment
The Hi-Tech Manufacturing segment secured orders valued at ₹ 2,395 crore during the quarter ended September 30, 2023 registering a healthy growth of 35% over the corresponding quarter of the previous year, with receipt of a key order in Defence Engineering business. Export orders constituted 8% of the total order inflow of the segment during the quarter.
The order book of the segment was at ₹ 25,958 crore as on September 30, 2023, with the share of export orders at 10%.
The segment posted customer revenues of ₹ 1,886 crore for the quarter ended September 30, 2023, registering a growth of 30% over the corresponding quarter of the previous year, with improved project execution. Export sales comprised 30% of the total customer revenues for the quarter.
The EBITDA margin of the segment at 14.9% for the quarter ended September 30, 2023 is lower compared to 18.5% reported in the corresponding quarter of the previous year, mainly reflecting the execution phase of jobs in the portfolio.
IT & Technology Services (IT&TS) Segment
The segment recorded customer revenues of ₹ 11,182 crore for the quarter ended September 30, 2023, registering a modest y-o-y growth of 7%, reflective of the growing demand for tech-enabled services in the IT&TS sector. International billing contributed 92% of the total customer revenues of the segment for the quarter ended September 30, 2023. The aggregate revenue of the two listed subsidiaries (LTIMindtree and L&T Technology Services Limited) in this segment at USD 1,364 Mn registered y-o-y growth of 4% in USD terms.
The EBITDA margin for the segment was at 20.2% for the quarter ended September 30, 2023 as compared to 21.4% in the corresponding quarter of the previous year. The segment margin was impacted mainly due to higher employee cost though improved operational efficiencies partially negated the impact.
Financial Services Segment
The segment reflects the performance of L&T Finance Holdings (LTFH), a listed subsidiary. The segment recorded income from operations at ₹ 3,084 crore during the quarter ended September 30, 2023, registering de-growth of 2% y-o-y basis, mainly attributable to planned phase out of Wholesale loan book.
The total Loan Book is at ₹ 78,734 crore in September 2023 vs ₹ 80,893 crore in March 2023. This variation is mainly due to sell downs to ARCs and prepayments/repayments of Wholesale and run down of the De-focused loan book. The Retail loan book now constitutes 88% of the total loan book as on September 30, 2023, in line with its stated long-term objective of retailisation of the portfolio.
The segment PBT for the quarter ended September 30, 2023 increased to ₹ 796 crore as compared to ₹ 613 crore in the corresponding quarter of the previous year due to rising NIMs+Fees and reduction in credit cost.
Development Projects Segment
The segment recorded customer revenues of ₹ 1,849 crore during the quarter ended September 30, 2023, registering healthy growth of 38% compared to corresponding quarter of previous year, driven by monetization of commercial property in Hyderabad Metro. The segment EBIT for the quarter ended September 30, 2023 registered a profit of ₹ 634 crore as compared to a loss of ₹ 12 crore during the corresponding quarter of the previous year, primarily due to the gain on sale of commercial property 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 September 30, 2023 at ₹ 1,622 crore registered growth of 14% y-o-y, mainly contributed by higher handover of residential flats in the Realty business. Export sales constituted 11% 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 20.0% for the quarter ended September 30, 2023 registered growth, compared to 17.5% reported in the corresponding quarter of the previous year was mainly aided by higher handover of flats in Realty.
Note:
Group Performance – Key Parameters for the quarter and half-year ended September 30, 2023 is attached in Annexure 1
Segment-wise summary of performance for the quarter and half-year ended September 30, 2023 is attached in Annexure 2
Outlook
Economic activity in India continues to witness resilience on the back of strong domestic demand in contrast to global trends. Investment activity is benefiting from continuing public sector capex with growth being witnessed in steel consumption, cement production as well as in imports and production of capital goods. Capacity utilization in the manufacturing sector is also trending up, which augurs well for country level capital formation.
The Indian economy is expected to grow by 6.5% in FY’24 primarily due to sustained buoyancy in services, consumer and business optimism, higher government spending, healthy balance sheets of banks and corporates, upcoming festive season demand and supply chain normalization.
Headwinds from global economic slowdown and declining global trade continue to pose event risks. Further, volatile energy and food prices in the wake of lingering geopolitical tensions and adverse weather conditions render uncertainty to the inflation outlook. While major central banks are signaling a peaking of their rate hike cycle, there are indications that the tight monetary policy stance could persist for longer than expected.
The recent conflict in the Middle East has raised concerns about potential increase in crude prices that can worsen the already fragile global economic situation, as the region is a crucial supplier of energy and a key shipping gateway to global trade. Despite this, we remain optimistic around fresh project awards in Oil & Gas, industrialization and energy transition projects in the GCC region.
The Company backed by its all-round capabilities in engineering, manufacturing, construction, project management and services will continue to focus on operational excellence and cost competitiveness for profitable execution of its large Order Book. The Company pursues its stated objective of demonstrating profitable growth with judicious use of capital and maximize shareholder value on a sustainable basis.
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.