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Informist, Wednesday, Oct. 30, 2024

By Steffy Maria Paul

MUMBAI – The management of Larsen & Toubro Ltd. maintained its guidance for order inflow growth of 10%, revenue growth of 15%, and margin of 8.25% for 2024-25 (Apr-Mar). "...I think we are staying (on) course with that guidance... we are reasonably confident that we will be able to meet the guidance as we see today," the company management said in a post-earnings media briefing. 

The company attributed the decline in its earnings before interest, tax, depreciation, and amortisation margin during the quarter to the inclusion of revenue from monetising the transit-oriented development of the Hyderabad metro project in the previous year. The same quarter a year ago had a one-time gain of INR 5.12 billion from the Hyderabad project, which had taken the margin up by 90 basis points, L&T said in its investor presentation. L&T reported an EBITDA margin of 10.3% for the latest quarter, down from 11% a year ago. The company said it is looking to further improve the ridership of the Hyderabad Metro and enhance its last mile connectivity. Hyderabad metro currently has a daily ridership of around 500,000.

The company expects to have an order pipeline worth INR 8 trillion at the end of the current financial year and said that it sees healthy prospects for its order pipeline in the near term. The company expects its infrastructure segment to make up around INR 5.5 trillion of this pipeline, while it expects its energy segment to contribute INR 2 trillion and the rest of the businesses to account for about INR 500 billion of this pipeline.

Talking about the order pipeline, the company said that the domestic market would make up around 55% of it, while the international market would contribute 45%. The company said it is expanding its footprint into Africa and Central Asia in a bid to de-risk its dependence on any particular market which might develop over time. The company added that it is not seeing much moderation in terms of the order pipeline for its segments, excluding infrastructure or mega projects, which are present in the international market. For the renewables and hydrocarbons sector, the company expects a strong order pipeline. It expects prospects from its international customers to remain strong for at least the near term, the company said.

The company said it plans to carve its renewable energy business out of its power transmission and distribution business and establish it as a separate business vertical within the infrastructure segment. In terms of thrust and attention, this would allow the company to look at the renewable energy segment, which has now sufficiently scaled up on its own merits for growth, it said. This move will likely accelerate growth in the renewable energy and power transmission and distribution business, L&T said. This would not lead to any changes in terms of segment reporting, it added. 

Talking about the prospects of nuclear energy, the company said India cannot overlook it as a source of energy. As structural challenges around positions on nuclear energy get resolved, and as part of the energy transition, there will be opportunities in the segment, the company said. While the company is participating in the nuclear energy segment in terms of supplying equipment and through the engineering, procurement, and construction mode, it's scale and consistency is not similar to that of the hydrocarbon or renewable energy segment, the company said.

Responding to a question on the contribution of the private sector to the company's order book, L&T's management said it expects orders from the private sector to come from areas such as airport and road development and construction of plants and commercial buildings. The company said that while the private sector will not be able to match the government spending overnight, once the growth momentum is sustained, private sector participation will likely rise up to 40-60%. 

After market hours Wednesday, L&T reported a consolidated net profit of INR 33.95 billion for September on revenues of INR 615.55 billion. The company beat analysts' consolidated net profit estimate of INR 32.62 billion and the revenue estimate of INR 577 billion rupees. Wednesday, shares of the company closed at INR 3,408.35 on the National Stock Exchange, up 0.8%.  End 

Edited by Deepshikha Bhardwaj

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