L&T Q1 Results: Revenue Up 22%, Margins Stable
L&T's revenue rose 22% year-on-year to Rs 35,853 crore in the three months ended June.
Larsen & Toubro Ltd.’s first-quarter revenue rose on better project execution in the infrastructure segment.
Revenue of India’s largest engineering-to-construction company rose 22% year-on-year to Rs 35,853 crore in the three months ended June, according to an exchange filing. That compares with the Rs 34,588.9-crore consensus estimate of analysts tracked by Bloomberg.
L&T Q1 FY23 Highlights (YoY)
Net profit rose 49.7% to Rs 2,293 crore, compared with the estimated Rs 1,647.1 crore.
Operating profit rose 25% to Rs 3956.7 crore against the Rs 3,853.4-crore forecast.
Operating margin was stable at 11% against 10.8% a year ago.
International revenues during the quarter stood at Rs 13,235 crore which is 37% of the total revenue.
Total orders secured at the group level during the quarter were Rs 41,805 crore, a growth of 57% year-on-year. These included orders from public spaces, metros, water management and waste water, and minerals and metals sectors, among others.
Domestic orders comprised 36% or Rs 24,000 crore. International orders were worth Rs 17,842 crore, about 43% of the total order inflow.
As on June 30, 2022, the consolidated order book of the group stood at a record Rs 3,63,448 crore with international orders comprising 28%.
Shares of L&T closed 1.76% lower before the results were announced compared with a 0.89% fall in the benchmark BSE Sensex.
Operating Segments Reorganised Under Lakshya 2026
L&T's operating segments were reorganised from April 1, 2022, in line with the five-year plan Lakshya 2026.
The company will now have five operating segments instead of nine earlier.
Hydrocarbon and power segments will now be part of energy segment to reflect group's entry into green energy.
The heavy engineering and defence engineering have been combined, to leverage the extensive engineering, manufacturing and fabrication expertise across the various customer segments.
The IT & Technology Services that earlier comprised of the listed IT&TS subsidiaries—L&T Infotech, L&T Technology Services, and Mindtree will now include the new age businesses of data centers and e-commerce. These businesses were earlier part of the ‘others’ segment.
Segment Performance
"Majority of the segments performed well during the quarter even though the quarter is regarded as the weakest in terms of seasonality," said R Shankar Raman, group chief financial officer of L&T.
“Around 70% of the tendered projects were awarded during the quarter reflecting the good environment and sentiment post Covid," Raman said. "We expect the process to continue going forward.”
Infrastructure Projects
The best performing segment for L&T received order inflows of Rs 18,343 crore during the quarter, a growth of 66%. International orders comprised 26% of this order inflow at Rs 4,691 crore.
The segment recorded customer revenue of Rs 14,181 crore in Q1FY23, a growth 36%. The growth was aided by improved execution momentum as the Covid-related challenges receded in the current quarter, the company said.
IT & Technology Services
The segment recorded revenue of Rs 9,424 crore in the first quarter, a growth of 30%, reflecting continued momentum in the IT&TS sector. International billing contributed 92% of the total customer revenue.
Hi-Tech Manufacturing
It secured orders valued at Rs 3,489 crore with 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 Rs 19,398 crore as on June 30, with the share of exports at 12%.
Energy Projects
This segment secured orders worth Rs 4,366 crore with receipt of a large order from Middle East in the offshore vertical of the hydrocarbon business. International order inflow constituted 91% of the total order flow of the segment during the quarter.
Outlook
The government's capital expenditure coupled with various expectation of 7.2% GDP growth augurs well for L&T, Raman said.
"The commodity prices softened in the first quarter of 2022; that will reverse the heat generated on the profitability of the companies," he said. "L&T is alive and agile to the development."
The government's persistent efforts to jumpstart economic growth through higher infrastructure spend and incentivizing domestic manufacturing should yield benefits in the medium term, the company said.