Informist, Wednesday, Oct. 30, 2024

By Rajesh Gajra

MUMBAI – Larsen & Toubro Ltd. beat market expectations with a strong revenue growth, but the bottom line growth was muted albeit slightly above the Street estimate in the quarter ended September. The company said the revenue growth was aided by an accelerated progress in various businesses in the projects and manufacturing portfolio.

The construction and engineering behemoth's consolidated net profit attributable to shareholders was up 5.4% on year at INR 33.95 billion in the quarter ended September on the back of revenue from operations jumping up by 21% to INR 615.55 billion. The company beat analysts' consolidated net profit estimate of INR 32.62 billion and also beat revenue estimate of INR 577 billion rupees.

The reported consolidated net profit growth of 5.4% on year was the lowest in 11 quarters. The reported consolidated revenue growth of 21% on year was the lowest in five quarters. L&T's operating profit, or the earnings before interest, tax, depreciation, and amortisation was up 13% on year to INR 63.62 billion in Jul-Sept, and the EBITDA margin shrunk to 10.3% from 11% a year ago.

The top line growth of L&T was aided by its infrastructure projects, energy projects, and financial services segments, while hte hi-tech manufacturing, the IT and technology services segments were a drag on revenue growth. Revenue from infrastructure projects jumped 30% on year to INR 319.54 billion in Jul-Sept, while that from energy projects rose 31% on year to INR 88.73 billion. On other hand, hi-tech manufacturing segment's revenue moved up by just 9% on year to INR 20.63 billion, and the information technology and technology services segment recorded a 6% on-year increase of INR 117.98 billion.

Profitability weakened for the energy projects and IT and technology services. Energy projects EBITDA margin shrunk to 8.8% in Jul-Sept from 9.5% a year ago, while that in hi-tech manufacturing segment shrunk to 12.8% from 14.9%. Infrastructure projects segment EBITDA expanded to 6.0% from 5.4%, while that of IT and technology services increased to 21% from 20.2%.

The September quarter order inflow of L&T at a group level ­­fell 10% on year to INR 800.45 billion, mainly due to an 80?ll in energy projects order inflow to INR 77.59 billion. The company said in the year ago quarter, it had received two ultra-mega international orders in the energy projects segment which inflated the base. In Jul-Sept, international orders made up for 83% of order inflow in this segment.

Order inflow in the infrastructure projects jumped 77% on year to INR 495.22 billion on the back of orders in transmission and distribution, and renewable energy. International orders made up for 63% order inflow in this segment.

The hi-tech manufacturing segment of L&T received orders valuing INR 39.20 billion in the September quarter, up 64% on year. The company said this was on the back of high value orders in the precision engineering and systems and heavy engineering businesses. Overseas orders constituted 37% of order inflow in hi-tech manufacturing.

Of L&T's consolidated operating expenses in Jul-Sept, the rise was notably higher in cost of construction materials consumed, which rose sharply by 45% on year to INR 170.33 billion in Jul-Sept. The cost of raw materials and components consumed was also sharply up by 40% on year to INR 62.05 billion.

L&T's consolidated net profit growth was muted due to the drag on EBITDA and the decline in EBITDA margin. Apart from this, a rise of 12.5% on year in depreciation to INR 10.24 billion also impacted the bottom line.

Another drag on net profit was a decline of 2.8% on year in other income to INR 11.01 billion. This, according to the company, was due to a fall in income from treasury investments. The treasury investments were lower due to the cash outgo from the buyback the company had done during 2023-24 (Apr-Mar).

International orders showed good momentum for L&T. In Jul-Sept, overseas orders were INR 500.83 making up for 63% of total order inflow during the quarter. International orders were largely driven by orders from West Asia. The company expects capital expenditure momentum to remain healthy from existing and potential clients in West Asia.

The consolidated order book of L&T at the group level crossed a milestone of INR 5 trillion in the September quarter, according to the company. The order book at the group level as of Sept. 30 was INR 5.10 trillion. The infrastructure projects order book was the highest at INR 3.43 trillion as of Sept. 30, and the share of international orders was 32%.

The energy projects order book was INR 1.17 trillion with international orders comprising 77%. Hi-tech manufacturing segment order book was INR 356.11 billion with a 10% share of international orders. The financial services segment's total loan book was INR 930.15 billion as of Sep 30.

For Apr-Sept, L&T's consolidated net profit attributable to shareholders rose 8.1% to INR 61.81 billion, while its consolidated revenue rose 18% to INR 1.17 trillion. Shares of L&T ended Wednesday 0.8% up at INR 3,408.35 on the National Stock Exchange. End

Edited by Akul Nishant Akhoury

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