Larsen & Toubro releases financial performance for the first quarter of the financial year 2022-2023

Larsen & Toubro achieved Consolidated Revenues of ₹ 35,853 crore for the quarter ended June 30, 2022 recording a y-o-y growth of 22% with strong execution witnessed in the Infrastructure Segment and riding on the sustaining growth momentum in the IT & TS portfolio. International revenues during the quarter at ₹ 13,235 crore constitute 37% of the total revenue.

More details:

  • The Company for the quarter ended June 30, 2022, posted Consolidated Profit After Tax (PAT) of ₹ 1,702 crore registered a robust growth of 45% over the corresponding quarter of the previous year.
  • The Company secured orders worth ₹ 41,805 crore at the group level during the quarter ended June 30, 2022, registering a growth of 57% over corresponding quarter of the previous year.
  • During the quarter, orders were received across diverse segments like Public Spaces, Metros, Water Management & Waste Water, Minerals and Metal, Factories, Data Centers, Defence, Power Transmission and Distribution and Hydrocarbon Offshore sectors. International orders at ₹ 17,842 crore during the quarter comprised 43% of the total order inflow.
  • The consolidated order book of the group is at a record ₹ 363,448 crore as on June 30, 2022, with international orders having a share of 28%.
  • Effective from April 1, 2022, the operating segments have been re-organised, in line with the business strategy to be adopted by the Company under its 5 year plan (Lakshya 2026). Some of the existing segments have been realigned to reflect the Group’s Lakshya 2026 strategy. The changes are as follows:

Infrastructure Projects Segment:

  • The Infrastructure Projects segment secured order inflows of ₹ 18,343 crore, during the quarter ended June 30, 2022, registering growth of 66% compared to corresponding quarter of the previous year with various orders secured across sub segments.
  • International orders at ₹ 4,691 crore constituted 26% of the total order inflow of the segment during the quarter. The segment order book stood at ₹ 263,977 crore as on June 30, 2022, with the share of international orders at 23%.
  • The segment recorded customer revenues of ₹ 14,181 crore for the quarter ended June 30, 2022, registering y-o-y growth of 36% aided by improved execution momentum as the Covid related challenges receded in the current quarter. International revenues constituted 19% of the total customer revenues of the segment during the quarter.
  • The EBITDA margin of the segment during the quarter ended June 30, 2022 was at 6.5% vis-à-vis 7.1% recorded in the corresponding quarter of the previous year. Margins for the quarter have been impacted by input cost escalations and change in revenue mix.

Energy Projects Segment:

  • The Energy Projects Segment secured orders valued at ₹ 4,366 crore during the quarter ended June 30, 2022, registering substantial growth compared to corresponding quarter of the previous year, with receipt of a large order from the Middle East in the Offshore vertical of Hydrocarbon business. International order inflow constituted 91% of the total order inflow of the segment during the quarter.
  • The segment order book was at ₹ 65,372 crore as on June 30, 2022, with the international order book constituting 58%.
  • The segment posted customer revenues of ₹ 5,073 crore during the quarter ended June 30, 2022, recording a growth of 3% y-o-y, largely attributed to pickup of execution  momentum in the Power business. International revenues had a share of 30% of the total customer revenues for the quarter.
  • The EBITDA margin of the segment at 8.5% for the quarter ended June 30, 2022 improved compared to 7.5% over corresponding quarter of the previous year, on account of execution cost savings in few projects.

Hi-Tech Manufacturing Segment:

  • The segment secured orders valued at ₹ 3,489 crore during the quarter ended June 30, 2022 registering substantial growth y-o-y with receipt of a key order in the Defence Engineering business. Export orders constituted 7% of the total order inflow of the segment during the quarter.
  • The order book of the segment was at ₹ 19,398 crore as on June 30, 2022, with the share of export orders at 12%. The segment posted customer revenues of ₹ 1,272 crore for the quarter ended June 30, 2022, recording a marginal y-o-y growth of 3%. Export sales comprised 19% of the total customer revenues for the quarter.
  • The EBITDA margin of the segment at 15.1% for the quarter ended June 30, 2022 declined compared to 19.2% reported in the corresponding quarter of the previous year, since the previous year was higher on release of cost provisions on completion of a key project and recognition of customer claims.

IT & Technology Services (IT & TS) Segment:

  • The segment recorded customer revenues of ₹ 9,424 crore for the quarter ended June 30, 2022, registering a y-o-y growth of 30% reflecting continued growth momentum in the IT&TS sector.
  • International billing contributed 92% of the total customer revenues of the segment for the quarter ended June 30, 2022. The revenue in USD terms for the 3 listed entities at USD 1,219 Mn, registered a sequential growth of 3%.
  • The EBITDA margin for the segment was at 22.2% for the quarter ended June 30, 2022 as compared to 22.8% in the corresponding quarter of the previous year. Improved operational efficiencies were offset by higher employee cost.

Financial Services Segment:

  • The segment reflects the performance of L&T Finance Holdings, a listed subsidiary. The segment recorded income from operations at ₹ 2,958 crore during the quarter ended June 30, 2022, registering a y-o-y decline of 3%, mainly attributed to the targeted reduction in the wholesale loan book.
  • The total Loan Book remained steady at ₹ 88,078 crore as compared with June 2021 at ₹ 88,440 crore, reflecting a cautious lending approach, focus on collections, portfolio sell down and a phased liquidation of the de-focused business and wholesale loan book.
  • The segment EBIT for the quarter ended June 30, 2022 increased to ₹ 356 crore as compared to ₹ 234 crore in the corresponding quarter of the previous year due to savings in credit cost and higher fee income.

Development Projects Segment:

  • The segment recorded customer revenues of ₹ 1,345 crore registering growth of 19% over the corresponding quarter of the previous year, driven by a higher PLF in the Nabha Power plant and increase in ridership in Hyderabad Metro.
  • The segment EBIT for the quarter ended June 30, 2022 registered a loss of ₹ 21 crore as compared to loss of ₹ 91 crore during the corresponding quarter of the previous year, due to improved metro ridership.

Outlook:

  • The Indian economy continues to sustain the strong recovery momentum evidenced by robust monthly high frequency indicators. With the Government’s move to cut taxes on petrol and diesel, imposition of export duty on steel and petroleum, restrictions on food exports and RBI’s recent action of increasing the REPO rate should ease the overall inflationary pressure.
  • India, however, faces near-term challenges in reining the fiscal deficit and yet manages to sustain the economic growth momentum despite a higher inflation and a more adverse balance of payments situation. The Government’s persistent efforts to jumpstart economic growth through higher infrastructure spend and incentivizing domestic manufacturing should yield benefits in the medium term.
  • On the global front, oil price dynamics and recent geo-political developments have led the global economy towards a zone of uncertainty in an environment of high inflation, volatile commodity prices, imposition of sanctions and resultant supply chain disruptions.
  • The Middle east region, an important geography for the Company’s Projects business, is likely to be benefitted from the high oil prices resulting in higher hydrocarbon and infrastructure capex spend. This augurs well for the Company, in terms of providing a larger scope of contracting opportunities.
  • The Company in its first year post announcing its Lakshya 2026 Strategic Plan, expects to continue its planned trajectory of profitable growth through an efficient and timely execution of its large order book and along with its many value enhancing measures, retain its leadership position and improve shareholder return on a sustainable basis.
  • The Company is on the path of diversification into the new businesses of Green Energy and E-commerce Platforms and at the same time pursue exit options / limit exposure in non-core businesses over the Lakshya 2026 strategic plan period.

About Larsen & Toubro:

  • Larsen & Toubro is an 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.

Source: Larsen & Toubro -Press Release | Image Credit (representational): L&T