Larsen & Toubro releases financial results for the third quarter of the Financial Year 2022-23

February 7, 2023 Rail News

Larsen & Toubro achieved Consolidated Revenues of ₹ 46,390 crore for the quarter ended December 31, 2022 recording a Y-O-Y growth of 17%, aided by improved execution in the Infrastructure Projects segment and continued growth momentum in the IT & TS portfolio.

More Details:

  • International revenues during the quarter at ₹ 17,317 crore constituted 37% of the total Revenue. For the nine months ended December 31, 2022, the Consolidated Revenues at ₹ 125,006 crore recorded a y-o-y growth of 21% with international revenues during the nine months at ₹ 46,025 crore constituting 37% of the total.
  • The Company for the quarter ended December 31, 2022, posted a total Consolidated Profit After Tax (PAT) of ₹ 2,553 crore, registering a robust growth of 24% over the corresponding quarter of the previous year.
  • The PAT includes an exceptional gain of ₹ 97 crore (net), attributed to profit on divestment of the Mutual Fund business of the Financial Services segment off-set by a one time charge due to remeasurement of the wholesale loan assets of the Financial Services segment at fair value. The recurring PAT for the quarter at ₹ 2,456 crore evidenced an increase of 20% as compared to the PAT of ₹ 2,055 crore for the corresponding quarter of the previous year.
  • For the nine months ended December 31, 2022, the PAT at ₹ 6,484 crore, registered a growth of 28% y-o-y basis. The Company received orders worth ₹ 60,710 crore at the group level during the quarter ended December 31, 2022, registering a growth of 21% over the corresponding quarter of the previous year.
  • During the quarter, orders were received across multiple segments like Oil & Gas, Public Spaces, Hydel & Tunnels, Irrigation systems, Ferrous Metals and Power Transmission & Distribution. International orders at ₹ 15,294 crore during the quarter comprised 25% of the total order inflow.
  • On a cumulative basis, the order inflow for the nine months ended December 31, 2022 stood at ₹ 154,429 crore, registering a growth of 30% y-o-y. International orders at ₹ 50,478 crore constituted 33% of the total.
  • The consolidated order book of the group was at ₹ 386,588 crore as on December 31, 2022, with international orders having a share of 26%.

Infrastructure Projects Segment:

  • The Infrastructure Projects segment secured order inflows of ₹ 32,530 crore, during the quarter ended December 31, 2022, registering a significant growth of 28%, as compared to the corresponding quarter of the previous year. International orders at ₹ 2,936 crore constituted 9% of the total order inflow of the segment during the quarter.
  • The segment order book stood at ₹ 278,967 crore as on December 31, 2022, with the share of international orders at 22%.
  • The segment recorded customer revenues of ₹ 21,944 crore for the quarter ended December 31, 2022, registering a y-o-y growth of 20%, driven by a smooth execution of a large order book. International revenues constituted 21% of the total customer revenues of the segment during the quarter.
  • The EBITDA margin of the segment during the quarter ended December 31, 2022 was at 7% vis-à-vis 7.1% recorded in the corresponding quarter of the previous year. Margin for the quarter remained stable amidst continuing cost pressures.

Energy Projects Segment:

  • The Energy Projects segment secured orders valued at ₹ 9,051 crore during the quarter ended December 31, 2022, registering a growth of 12% y-o-y on receipt of a large domestic offshore oil & gas order in the Hydrocarbon business.
  • International order inflow constituted 14% of the total order inflow of the segment during the quarter. The segment order book was at ₹ 72,000 crore as on December 31, 2022, with the international order book constituting 50%.
  • The segment achieved customer revenues of ₹ 6,333 crore during the quarter ended December 31, 2022, recording a moderate growth of 7% y-o-y. International revenues had a share of 40% of the total customer revenues for the quarter.
  • The EBITDA margin of the segment at 8.7% for the quarter ended December 31, 2022 improved compared to 8.3% over corresponding quarter of the previous year, on account of execution cost savings in certain Hydrocarbon projects.

Hi-Tech Manufacturing Segment:

  • The segment secured orders valued at ₹ 1,931 crore during the quarter ended December 31, 2022 registering a decline of 36% over corresponding quarter of the previous year, largely due to subdued ordering witnessed in the Defence Engineering business.
  • Export orders constituted 43% of the total order inflow of the segment during the quarter. The order book of the segment was at ₹ 19,869 crore as on December 31, 2022, with the share of export orders at 16%.
  • The segment posted customer revenues of ₹ 1,673 crore for the quarter ended December 31, 2022, registering growth of 14% over the corresponding quarter of the previous year with accelerated progress in few jobs. Export sales comprised 21% of the total customer revenues for the quarter.
  • The EBITDA margin of the segment at 17.5% for the quarter ended December 31, 2022 registered decline, compared to 19.9% reported in the corresponding quarter of the previous year, since the previous year quarter had the benefit of a key job crossing the margin recognition threshold.

IT & Technology Services (IT & TS) Segment:

  • During the quarter, L&T Infotech Limited and Mindtree Limited successfully completed their merger and started operating as a merged entity viz. LTIMindtree Limited. The segment recorded customer revenues of ₹ 10,517 crore for the quarter ended December 31, 2022, registering a y-o-y growth of 25%, reflecting the continuing demand for tech-enabled services.
  • International billing contributed 93% of the total customer revenues of the segment for the quarter ended December 31, 2022. The aggregate revenue of the two listed subsidiaries (LTIMindtree and L&T Technology Services) in this segment at USD 1,295 Mn registered a moderate sequential growth of 2%.
  • The EBITDA margin for the segment was at 19.2% for the quarter ended December 31, 2022 as compared to 23.6% in the corresponding quarter of the previous year. The segment margin was impacted mainly due to one-time merger integration expenses in LTIMindree.

Financial Services Segment:

  • The segment reflects the performance of L&T Finance Holdings, a listed subsidiary. The segment recorded income from operations at ₹ 3,349 crore during the quarter ended December 31, 2022, registering a y-o-y growth of 13%, mainly attributed to higher disbursements in retail business, as the subsidiary continues to focus on its strategy of higher retailization of the loan book.
  • The total Loan Book at ₹ 88,426 crore grew by 3% as compared with December 2021 at ₹ 85,552 crore. Retail loan book increased by 34% while wholesale loan book shrunk by 24% in the last one year. The Retail loan book constitutes 64% of the total loan book as on December 31, 2022.
  • The segment PBT for the quarter ended December 31, 2022 increased to ₹ 630 crore as compared to ₹ 434 crore in the corresponding quarter of the previous year due to better NIM+Fees and lower credit costs arising from improved asset quality. During the quarter, LTFH concluded the sale of its mutual fund business to HSBC AMC.

Development Projects Segment:

  • The segment recorded customer revenues of ₹ 1,106 crore during the quarter ended December 31, 2022 registering growth of 13% 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 December 31, 2022 registered a loss of ₹ 6 crore as compared to loss of ₹ 48 crore during the corresponding quarter of the previous year, primarily aided by improved metro ridership.
  • During the quarter, the Company entered into a share purchase agreement, to sell its entire shareholding in L&T Infrastructure Development Projects Limited, a joint venture, primarily engaged in the development and operation of toll road and power transmission assets. Accordingly, the investment in the joint venture has been classified as “Held for Sale”, pending receipt of necessary approvals.

Outlook:

  • The Indian economy continues to stay resilient amidst geopolitical uncertainties, slowing global trade, disrupted supply chains, volatile commodity prices and rising interest rates. Structural reforms carried out in the country over the past several years are helping the country to regain a sustainable growth momentum despite the persisting global challenges.
  • There is visible tax buoyancy in the country today enabling the government to pursue its targeted capex plans. The PLI schemes of the Government are expected to incentivize private players, both domestic and foreign, to set up manufacturing facilities in an environment of improving demand conditions and business confidence.
  • Lastly, the relatively stable financial system will facilitate disbursement of credit towards investment programmes in the future. Major private capex investments are likely in energy transformation, emerging tech, healthcare, logistics, industrial parks, data centres etc. which augurs well for the EPC and construction business.
  • The Government is likely to continue the emphasis on infrastructure spending while providing subtle support to consumption and addressing the need for investing in new age technologies to combat the climate change risks.
  • Elsewhere, major parts of the global economy continue to tread in turbulent waters due to policy tightening, high inflation, worsening financial conditions and continued trade disruptions due to the ongoing Russia-Ukraine conflict. Further, China is running the risk of managing the Covid related challenges as restrictions on movement have been eased, however the impact, if any, could be temporary.
  • With softening demand conditions and elevated interest rates, it is expected that inflation will soften in 2023. Despite these several headwinds, we believe the global economy is not at a higher risk of sliding into a recession.
  • Oil prices are likely to remain firm at current levels, aiding the GCC nations to continue to earn surpluses and thereby creating sufficient financial flexibility to invest in sectors besides oil viz., industrial and green investments.
  • In this backdrop, the Company possesses the necessary capability and flexibility to continuously rebalance its approach and strategy in order to benefit from the dynamic business environment.
  • The Company is focused on tapping emerging opportunities with its proven competence in the domains of engineering, design, manufacturing, construction, project management, IT and financial services and committed to create sustainable long term value for its stakeholders.

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