L&T says co needs INR 700 bln-INR 800 bln in Jan-Mar to attain FY25 guidance
This story was originally published at 21:44 IST on 30 January 2025
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--L&T: International orders constitute 54% of co's orders
--CONTEXT: Comments by L&T management in a post-earnings press call
--L&T: Infra vertical's 40% revenue comes from intl business
--L&T: Need another INR 700 bln-INR 800 bln to achieve FY25 guidance
--L&T: Guided for stable margin in FY25, on same trajectory
--L&T: Safe to assume co's order inflow target is within reach
--L&T: Energy segment outlook is positive, pipeline is strong
--L&T: Any rupee depreciation has favourable impact on co
--L&T:Order pipeline of energy ops to be driven by hydrocarbon opportunities
--L&T: Geopolitical tensions unlikely to worsen from here
By Anjana Therese Antony
MUMBAI – Larsen & Toubro Ltd. said it needs about INR 700 billion-INR 800 billion of orders in Jan-Mar to attain its 10% order growth guidance for the financial year 2024-25 (Apr-Mar). "The orders that we are targeting, by their nature, are lumpy. The ability to achieve the target depends on how successful we are in some of those orders," the management said in a post-earnings virtual media press conference.
The Mumbai-based engineering and construction giant is in a "happy position", with a significant number of orders under its belt to achieve the guidance, it said, adding that the order inflow target it has set is well within its reach. The company's consolidated order book was worth INR 2.67 trillion as of Dec. 31. Its order inflow of INR 1.16 trillion during the December quarter reflected 53% growth from the year-ago period.
L&T said its revenue growth guidance of 15% for FY25 looks safe, and it is targeting an operating margin of 8.2% for the core engineering business this fiscal.
L&T has at least six business verticals, including its infrastructure operations, technology services, energy, and hi-tech manufacturing. Its infrastructure operations contribute to over 42% of the company's orders. "Looking forward, the prospect pipeline for order flow is encouraging at about INR 5.5 trillion.... Roughly about INR 4 trillion is from the infrastructure segment and about INR 1.4 trillion from the energy segment, essentially hydrocarbon," the management said. Revenue from the infrastructure projects segment grew 15% on year to INR 321.34 billion and that from the energy business increased 41% to INR 110.51 billion.
The company's international business accounts for 40% of revenue in the infrastructure vertical. International business also accounts for 54% of the company's orders across verticals.
L&T also has a positive outlook for its energy business, which accounts for 34% of total orders, with the robust order pipeline expected to be driven by hydrocarbon and renewable energy. There are three sub-segments under energy--hydrocarbon, carbon light, and green energy. More
Commenting on the depreciation of the rupee, the company said any fall in the currency's value would have a favourable impact on its business as it earns a large part of its revenue in foreign currency and has an active hedging strategy in place. During Oct-Dec, the Indian rupee had fallen to its then record low of 85.80 per dollar from the quarter's high of 83.80 a dollar on persistent dollar purchases by importers. On Thursday, the rupee closed at 86.62 per dollar.
L&T's bottom line and top line both failed to meet the market's expectations. Its consolidated net profit grew 14% on year to INR 33.59 billion, lower than the Street's estimate of INR 36.72 billion. The company's revenue rose over 17% to INR 646.68 billion, also failing to meet expectations of INR 658.5 billion. The company released its December quarter results after market hours Thursday. Its shares closed 0.8% lower at INR 3,420.95 on the National Stock Exchange. End
Edited by Rajeev Pai
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