L&T Financial Results for the quarter ended June 30, 2024
Growth Momentum Continues | Order Inflow 8%, Revenue 15%, PAT 12%
Bengaluru, 24 July 2024: Larsen & Toubro achieved Consolidated Revenues of ₹ 55,120 crore for the quarter ended June 30, 2024 registering a y-o-y growth of 15% with robust execution witnessed in the Projects & Manufacturing (P&M) portfolio on the back of a large order book. International revenues during the quarter at ₹ 26,248 crore constituted 48% of the total revenues.
The Company for the quarter ended June 30, 2024, posted a Consolidated Profit After Tax (PAT) of ₹ 2,786 crore, registering growth of 12% compared to the previous year.
Further, the Company received orders worth ₹ 70,936 crore at the group level during the quarter ended June 30, 2024, registering a y-o-y growth of 8% aided by the strong ordering momentum in the Middle East. During the quarter, orders were received across multiple segments like Offshore vertical of Hydrocarbon business, Renewables, Transmission & Distribution, Roads, Nuclear Power, Hydel & Tunnel, Ferrous Metals, Health, and the Precision Engineering sectors. International orders at ₹ 32,598 crore during the quarter comprised 46% of the total order inflow.
The consolidated order book of the group as on June 30, 2024, is at ₹ 490,881 crore registers growth of 3% over Mar’24 and 19% y-o-y, with the share of international orders at 38%.
Commenting on the results, S.N. Subrahmanyan, Chairman and Managing Director said: “We have achieved steady growth across all financial parameters in Q1 FY 2024-25, despite the geopolitical situation across the globe. Amidst various transformational shifts happening worldwide, we are well-positioned to grasp these opportunities with our expertise in our traditional P&M business and technology driven new-age businesses. The Financial Services portfolio has achieved a remarkable transformation into Retail Finance with improved profitability. To enhance our presence in the Semiconductor sector, we have recently entered into a share purchase agreement with SiliConch Systems, a Bengaluru-based chip design company.
As a testament to our exceptional credit quality and robust financial health, two coveted global credit rating agencies – S&P and Fitch – have assigned ‘BBB+’ rating to the company. This is two notches above the sovereign rating. Further, MSCI ESG Research has upgraded our ESG rating to ‘BBB’ for improved performance on Environment, Social & Governance parameters.
The Union Budget released yesterday presented a detailed roadmap towards pursuit of a Viksit Bharat by 2047. With the expected policy continuation in India, the tailwinds in the Indian economic growth is likely to continue which will facilitate the Group to achieve its Lakshya 26 targets.”
Segment-wise Performance Highlights
Infrastructure Projects Segment:
The Infrastructure Projects segment secured order inflow of ₹ 40,053 crore, during the quarter ended June 30, 2024, which is in line with the previous year. International orders constituted 49% of the total order inflow of the segment during the quarter.
The segment order book stood at ₹ 324,879 crore as on June 30, 2024, with the share of international orders at 28%.
For the quarter ended June 30, 2024, the customer revenues at ₹ 26,908 crore registered a strong y-o-y growth of 22%, aided by improved execution momentum witnessed across various project sites. International revenues constituted 34% of the total customer revenues of the segment during the quarter.
The EBITDA margin of the segment during the quarter ended June 30, 2024 was at 5.8%.
Energy Projects Segment:
The Energy Projects segment secured orders valued at ₹ 8,792 crore during the quarter ended June 30, 2024, registering a healthy growth of 21% on y-o-y basis with receipt of high value orders in the domestic Offshore vertical of Hydrocarbon business. International order inflow constituted 22% of the total order inflow during the quarter.
The segment order book was at ₹ 117,724 crore as on June 30, 2024, with the international order book constituting 76%.
For the quarter ended June 30, 2024, the customer revenues at ₹ 8,495 crore registered a robust growth of 27% y-o-y mainly due to execution ramp up in international projects in the Hydrocarbon business. International revenues constituted 68% of the total customer revenues of the segment during the quarter.
The EBITDA margin of the segment was at 8.7% for the quarter ended June 30, 2024.
Hi-Tech Manufacturing Segment:
The segment secured orders valued at ₹ 3,677 crore during the quarter ended June 30, 2024 registering a growth of >100% over the previous year, with receipt of a high value order in the Precision Engineering & Systems business. Export orders constituted 8% of the total order inflow of the segment during the quarter.
The order book of the segment was at ₹ 33,765 crore as on June 30, 2024, with the share of export orders at 7%.
For the quarter ended June 30, 2024, the customer revenues at ₹ 1,845 crore registered a growth of 4% y-o-y, with improved execution in Precision Engineering & Systems business. International revenues constituted 23% of the total customer revenues of the segment during the quarter.
The EBITDA margin of the segment was at 17.4% for the quarter ended June 30, 2024.
IT & Technology Services (IT&TS) Segment:
The segment recorded customer revenues of ₹ 11,505 crore for the quarter ended June 30, 2024, registering y-o-y growth of 6%, reflective of the subdued global macro outlook impacting discretionary IT&TS spends. International billing contributed 92% of the total customer revenues of the segment for the quarter ended June 30, 2024. The aggregate revenues of the two listed subsidiaries (LTIMindtree Limited and L&T Technology Services Limited) in this segment at USD 1,391 Mn registered a y-o-y growth of 4%.
The EBITDA margin for the segment was at 20.0% for the quarter ended June 30, 2024.
Financial Services Segment:
The segment recorded income from operations at ₹ 3,664 crore during the quarter ended June 30, 2024, registering y-o-y growth of 21% mainly attributable to higher disbursements in the retail business.
The total Loan Book at ₹ 88,717 crore grew by 4% as compared with March 2024 at ₹ 85,565 crore. Further, on a y-o-y basis the total Loan Book reported growth of 13%. The Retail loan book now constitutes 95% of the total loan book as on June 30, 2024.
The segment PBT for the quarter ended June 30, 2024 increased by 29% to ₹ 922 crore.
Development Projects Segment:
The segment recorded customer revenues of ₹ 1,327 crore during the quarter ended June 30, 2024 registering a growth of 3% over the previous year.
The segment EBIT for the quarter ended June 30, 2024 increased by 20% to ₹ 147 crore.
The stake sale in L&T Infrastructure Development Projects Limited (L&T IDPL), a joint venture primarily engaged in the development and operation of toll roads and power transmission assets, was concluded on April 10, 2024.
“Others” Segment:
“Others” segment comprises (a) Realty (b) Industrial Valves (c) Construction Equipment & Mining Machinery and (d) Rubber Processing Machinery.
Customer revenues of the segment during the quarter ended June 30, 2024 at ₹ 1,375 crore registered a de-growth of 37% y-o-y, primarily due to lower handover of residential units in the Realty business. Export sales constituted 17% of the total customer revenues of the segment during the quarter, majorly relating to Industrial Valves business.
During the quarter ended June 30, 2024, the segment EBITDA margin was at 23.4%.
Note:
The key parameters of the Group and Segment Performance for the quarter ended June 30, 2024, are shown in Annexure 1.
Segment composition is provided in Annexure 2.
Outlook
India’s domestic economic activity has remained resilient with manufacturing activity continuing to gain ground on the back of strengthening domestic demand. The service sector maintained its buoyancy as evident from available high frequency indicators. Private consumption, the mainstay of aggregate demand, is recovering, with steady discretionary spending in urban areas. Revival in rural demand is getting a fillip from improving farm sector activity. With an expected above normal south-west monsoon, kharif production is likely to get a boost and reservoir levels likely to be replenished which were running low due to extreme heat. Inflation, however, continues to require close monitoring by the policy makers.
With the Union Elections behind and the likely political stability, the Government’s continued thrust on capex and business optimism augur well for investment activity. However, the pace of infrastructure progress could slow down due to skilled labour shortage in certain sectors. The Indian economy is at an inflection point in its path towards greater transformational changes that will bring about more stability and growth.
The global economy is expected to witness a rebound, though the run-up to the US Presidential elections in November can exhibit economic volatility. With the change of Government in UK, and a hung parliament in France, the concern about the European economic recovery remains. China’s economic recovery remains debatable with rising trade tensions threatening to overshadow growth in exports.
Central banks in the West are closely tracking inflation data and may announce a couple of rate cuts later in 2024. Further, regional conflicts remain contained as of now without having
major adverse implications for the global economy. The countries in the Middle East remain focused on investments in Oil & Gas, Infrastructure, Industrialisation and Energy transition. However, headwinds continue to linger around geopolitical conflicts, supply chain disruptions and commodity price volatility.
The Company retains the focus on profitable execution of its robust order book in the backdrop of a relatively stable environment. It is well positioned to exploit the emerging opportunities across the diversified business portfolio and limit exposure on non-core businesses. The Company remains committed to maximizing sustainable value to all its stakeholders.
Background:
Larsen & Toubro is a USD 27 billion Indian multinational enterprise engaged in EPC Projects, Hi-Tech Manufacturing, and Services, operating across multiple geographies. A strong, customer–focused approach and the constant quest for top-class quality have enabled L&T to attain and sustain leadership in its major lines of business for over eight decades.
