 "L&T Q4 results: Profit rises 10% to Rs 4,396 crore, beats estimates")
Engineering conglomerate Larsen & Toubro (L&T) on Wednesday reported a 10 per cent rise in its net profit attributable to the owners of the company for the January-March quarter (Q4FY24) on the back of improved operational performance. In its outlook, the company maintained it expects domestic tailwinds to continue.
For FY25, L&T’s management guided for 15 per cent growth in revenue and 10 per cent growth in order inflow from a year ago, with core margins expected to remain at 8.25 per cent. The company expects the order inflow momentum to pick up by the end of the second quarter once the new government is formed and stabilised.
For the quarter under review, L&T reported a net profit of Rs 4,396 crore, up 10.3 per cent from a year ago on a consolidated basis.
Revenue for the company also rose 15 per cent year-on-year (YoY) to Rs 67,079 crore.
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Order inflow for the quarter, however, declined 5 per cent Y-o-Y to Rs 72,150 crore, after reporting double-digit growth for the first three quarters. Company executives said the decline was on expected lines, given the general elections underway in the country. Outstanding order book as of March 2024, the company said, was at approximately Rs 4.75 trillion, up 20 per cent from a year ago, with the share of international orders at 38 per cent. For the full year ended March 2024, L&T reported a profit of approximately Rs 13,059 crore, up 25 per cent Y-o-Y, and an order inflow of approximately Rs 3.02 trillion.
L&T’s board also recommended a final dividend of approximately Rs 28 per equity share, subject to the approval of shareholders.
L&T beat street expectations, as in a Bloomberg poll, 17 analysts estimated revenue of approximately Rs 65,869 crore and 12 analysts estimated net income adjusted of approximately Rs 4,017.6 crore. Sequentially, L&T’s profit rose 49.2 per cent and revenue grew by 21.7 per cent.
L&T Chairman and Managing Director S N Subrahmanyan said the tailwinds of India’s economic growth would continue due to the impact of structural reforms, strengthening physical and digital infrastructure, improving institutional strength, and strong governance.
The company, in a statement, said headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, continuing sea route trade disruptions, and extreme weather events posed risks to the outlook.
L&T also cautioned that the Middle East region was feeling the impact of the conflict in West Asia. An escalation or spread of the conflict and disruptions in the Red Sea could have an adverse economic impact on the region. About 70 per cent of the new international orders that L&T won in FY24, the company said, was from the Middle East.
L&T’s order inflow from international orders declined Y-o-Y in the March 24 quarter. R Shankar Raman, chief financial officer for the company, did not expect the decline in international orders to be a trend. “Some of the (potential) Middle East orders went into review and it so happened that international orders declined in the fourth quarter, these orders are also lumpy,” Raman said.
Segment-wise, L&T’s infrastructure projects vertical registered a 24 per cent decline in order inflow for the quarter. Full-year margins for this segment were at 6.2 per cent.
Raman said the pressure on infra margins was a combination of time delay in execution of projects, delay in settlements of cost escalations from the clients, and “investments being made to beef up execution capabilities for the large order book also had a bearing on the margins," he said.
L&T’s energy business, for the full year, reported a 100 per cent rise in order inflow at Rs 73,788 crore. Raman said: “Growth in the order inflow for the energy segment for the current year needs to be watched with the tensions in the Middle East.”
He said the company might not be able to maintain the same order win growth as last year, also due to the change in the base, but margin and revenue growth trends will continue.
Commenting on labour requirements, Raman said the company added 8,000 new people in the last financial year, and would continue to add resources according to the growth momentum. Sharing expected timelines on marquee projects, he said a FY27 completion timeline for India’s first high-speed rail project, where L&T is a major contractor.
In a separate statement, rating agency S&P assigned its ‘BBB+’ long-term issuer credit rating to the company and said the stable rating outlook reflects its expectation that L&T’s stable EBITDA margin and strong order backlog would improve its earnings and cash flow over the next two years.