L&T Q4 Results: Profit Rises 10.9% On Higher Sales, Project Execution
Operating margins, however, dropped 62 basis points to 11.71% against 12.3% a year earlier.
Larsen and Toubro Ltd.'s fourth-quarter profit beat analysts' estimates on better project execution across segments.
The net profit of India’s largest engineering-to-construction company rose 10.98% year-on-year to Rs 4,446.74 crore in the three months ended March, according to an exchange filing. This compares with the Rs 3,965.1 crore consensus estimate of analysts tracked by Bloomberg.
The earnings were largely driven by strong performance across the infrastructure, information technology, and information technology-enabled services segments.
L&T Q4 FY23 Highlights (YoY)
Revenue from operations rose 10.4% to Rs 58,335.15 crore (Bloomberg estimate: Rs 58,907.23 crore).
Operating profit, or Ebitda, rose 4.8% to Rs 6832.5 crore (Bloomberg estimate: Rs 7,146.99 crore).
Operating margin fell 62 basis points to 11.7% from 12.3% a year earlier.
International revenues during the March quarter stood at Rs 22,750 crore, which constituted 39% of the total revenue.
Total orders secured at the group level during the period were Rs 76,099 crore, a growth of 3% year-on-year. Orders were received from oil and gas, public spaces, hydel and tunnels, irrigation systems, ferrous metals, and power transmission and distribution segments.
International orders of Rs 36,046 crore during the quarter comprised 47% of the total order inflow. As on March 31, the consolidated order book of the group stood at a record Rs 3.99 lakh crore.
Company Beats FY23 Revenue Guidance; Guides For FY24
The company has beaten its full-year guidance for revenue and order intake of 12–15% as it achieved a full-year revenue growth of 17%. Order intake rose 19% for financial year 2023. The operating margin for the full year were lower at 8.6% in comparison with 9.3% in fiscal 2022.
"Based on an internal assessment, we believe an order intake growth of 10–12% in FY24 and the revenue growth in the range of 12–15% on a base of total order book of Rs 4 lakh crore," R Shankar Raman, group chief financial officer of L&T, said in a conference call. "We expect to achieve an operating margin of 9% in FY24."
According to Raman, the margins were lower in the last fiscal, given the higher input costs with timeline pressure to execute projects already delayed due to Covid-related issues.
"The margins are not dependent on one-year as contracts materialise over several years," he said. "FY25 will be the true reflection of normalised margins of the post-Covid period."
Segment-Wise Performance
Infrastructure Projects
The order inflows for the infrastructure segment reduced 9% year-on-year to Rs 41,187 crore in the fourth quarter. International orders constituted 29% of the segment order inflows. The segment order book stood at Rs 2.84 lakh crore, out of which international orders were 22%.
The Ebitda margin for FY23 was at 7% against 8.2% in the previous fiscal. Margin for the year remained subdued largely due to commodity price increases and logistic issues, Raman said.
Energy Projects
The segment orders rose 17% to Rs 8,892 crore in the March quarter, on receipt of multiple international orders in hydrocarbon business, the company said.
The international orders constituted a majority of the total order inflows for the quarter. The segment order book was at Rs 72,463 crore as on March 31, 2023, with the international order book constituting 63%.
Hi-Tech Manufacturing Segment
The segment orders rose 41% to Rs 8,573 crore in the quarter ended March. International orders constituted 9% of the total order inflows. The order book of the segment was at Rs 26,214 crore, as on March 31, 2023, with the share of export orders at 13%.
IT & Technology Services
In the December quarter, Larsen & Toubro Infotech Ltd. and Mindtree Ltd. successfully completed their merger and started operating as a merged entity—LTIMindtree Ltd.—with effect from Nov. 14, 2022.
The segment recorded customer revenues of Rs 40,737 crore for the year ended March 31, registering a robust growth of 26%. It reflects the demand for tech-enabled services.
International billing contributed 93% of the total customer revenues of the segment for fiscal 2023. The aggregate revenue of the two listed subsidiaries—LTIMindtree and L&T Technology Services—in this segment grew 16% to $5,095 million.
Financial Services
L&T Finance Holdings Ltd. reported 5% growth in revenue from operations at Rs 3,116 crore in the January–March quarter.
The total loan book at Rs 80,893 crore in the last fiscal reduced by 8% in comparison to fiscal 2022, primarily on account of planned reduction in wholesale loan book on repayments and sell downs during the year, the company said.
The retail loan book increased by 35%, while the wholesale loan book shrunk by 53% during the year. The retail loan book now constitutes 75% of the total loan book as on March 31.
Shares of L&T closed 0.30% lower before the results were announced, as compared with a 0.29% rise in the benchmark S&P BSE Sensex.