Infrastructure and engineering major Larsen & Toubro displayed a robust financial performance in the quarter ended 30 September, but new order inflows tripped on a high base of last year and post-election sluggishness.
The company expects a revival in domestic order inflow in the latter half of FY25, as government tendering activity picks up pace.
Meanwhile, its focus on overseas expansion continued to pay dividends, with every second rupee it earned during the quarter coming from international business. International business also helped L&T beat the blues in terms of order booking, with more than three-fifths of new orders in the mainstay infrastructure projects segment coming from overseas.
The company booked ₹80,045 crore worth of orders during the quarter, taking its orderbook past the ₹5-trillion mark. The new order booking was a tenth lower compared to last year, mainly because of a high base. L&T had last year booked two large overseas orders in the hydrocarbon space during the second quarter worth around ₹40,000 crore.
“That tilted the numbers in terms of percentage,” R. Shankar Raman, president, CFO and board director- L&T, said during a post-earnings call. “That being said, it is creditable that the company has been able to maintain its win rate in the opportunities it has been bidding for so far.”
The country’s largest infrastructure maker recorded a 5% year-on-year growth in consolidated net profit during the quarter at ₹3,395 crore. It had last year recorded an income of ₹512 crore through monetization of certain assets related to Hyderabad Metro, which had shored up its profits and margins. Without that non-recurring revenue, its profit has improved 25% year-on-year.
The company reported earnings before interest, tax, depreciation and amortization (Ebitda) of ₹6,362 crore during the quarter, which was 13% higher year-on-year. The Ebitda margin at 10.3% was about 70 basis points lower.
The consolidated revenue for the quarter at ₹61,555 crore was 21% higher compared to last year.
“We have delivered yet another quarter of strong financial performance despite the continuing global macroeconomic volatility,” L&T chairman and managing director S.N. Subrahmanyan said in a press statement. “Our new transformative investments in green energy, data centres, digital platforms and semiconductor design will, besides improving our digital and sustainability footprint, complement our current business portfolio as well.”
Looking ahead, Subrahmanyan said that the company was committed to delivering sustained growth. “India’s growth story remains intact on the back of continued public capex spends and a visible recovery in private investments as well. We expect the Middle East capex momentum to remain healthy,” he said.
Among business segments, the infrastructure projects division recorded fresh orders of ₹49,522 crore, which was 77% more year-on-year. The order flow was dominated by fresh order bookings from overseas, primarily led by the Middle East. The segment order book stood at ₹3.4 trillion as of 30 September, with the share of international orders at 32%.
The company is looking to expand its business in Central Asia to diversify its international business beyond the Middle East. L&T had earlier taken a similar call to increase its presence in Africa to de-risk its overdependence on the Middle East.
The energy projects division booked fresh orders of ₹7,759 crore compared to ₹40,141 crore last year, when it had booked two large hydrocarbon orders. The segment order book was at ₹1.2 trillion, with the international order book constituting 77%.
The company noted that the Indian economy was “sanguine” despite the ongoing global geopolitical turbulence and growth outlook remains steady. Investment activity has remained resilient, with government capex rebounding from a contraction observed in the first quarter, the company said in its press statement.
“Additionally, a new government policy offering employment-linked incentives to workforce and corporates could improve availability of skilled (and) trained labour. A better-than-expected south-west monsoon augurs well for the revival of the rural economy and consumption demand,” the company said.
The L&T stock gained 0.77% on the BSE on Wednesday to close at ₹3,407.1. Sensex fell 0.53%. The earnings were declared post market hours.
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