Larsen & Toubro hosted a
conference call on May 8, 2024. In the conference call the company was
represented by P Ramakrishnan, Head IR.
Key takeaways of the conference call
Group order inflow for FY24 stood
at Rs 302812 crore (up 31%YoY) and for Q4FY24 was Rs 72150 crore (down 5%YoY).
Lower order intake in Q4FY24 was largely at international side as the domestic order
inflow grew by 17% as compared to the corresponding quarter of the previous
year.
Consolidated order book of the
group as on March 31, 2024 stood higher by 20%YoY to Rs 475,809 crore [International
38%; domestic 62%].
Infra segment order book stood as
end of Mar 2024 stood at ₹ 311,665 crore [International orders 27%, domestic
73%] and the book to bill is around 3 years. Infra order intake in Q4FY24 was Rs 31340
crore (down 24%YoY). Lower infra order intake during the quarter is largely due
to the receipt of some high-value orders in the previous year. International
orders constituted 22% of the total order inflow for the quarter.
Prospects pipeline - Aggregate
prospects as end of March 31, 2024 stood at Rs 12.1 trn vs. 9.7 trn at that
same time last year translating into a growth of 24%yoy basis. Increase is
largely due to infra and hydrocarbon.
Infra prospects pipeline was Rs 7.25 trn vs. 6.5 trn last year; HC is Rs
3.87 trn vs. Rs 2.44 trn last year; Power Rs 0.5 trn vs. Rs 0.5 trn; Hitech mfg
Rs 0.35 trn vs. Rs 0.25 trn last year and Green energy Rs 0.12 trn Rs 0.02 trn.
Infra prospects pipeline was up
11% to 7.25 trillion and of which domestic is Rs 5.39 trillion and balance Rs
1.86 trillion is international. Of the Infra prospects pipeline about 21% is
water, 21% is power T&D, 20% is transportation, 20% B&F, 14% Heavy
Civil Infra and 7% is mineral and metals.
Guidance for FY25- Expect a
growth of 10% in order inflow for FY25. Expect softness in Order awarding/finalization
in H1FY25 due to elections in domestic market.
On revenue front expect a growth of 15% over FY24 given large order book
on hand expect execution to carry on at good clip. On margin from the projects and mfg portfolio
margin will be at around 8.25% same as it was in FY24. For FY25 Net Working Capital to Revenue expected
at 15% for FY25.
Margin guidance for FY25
considering the impact of following factors -
Order mix in terms of domestic and international (international comes
with lower margin but with better WC terms); Infra order mix (over recent years
bagged large renewable orders which is of lower embedded margin), EPC business
risk including competitive bidding and time delays; delay in claim settlements;
Investment in capability and resources that will have shorter impact on margin
even-though it will be beneficial in the long term.
Order book as end of March 31,
2024 stood at Rs 4.6 trillion up 20%yoy.
Of which 62% is domestic balance 38% is international. Out of 38%
international 92% Middle East, 2% is Africa and balance 6 % is from other
geographies. Of the total order book around 19% is funded by multilateral
funding institutions.
Of the domestic order book of Rs
2.95 trillion the Central Government orders were 14%, State Government is 28%,
PSUs (of State Government) is 36% and private sector is 22%.
Of the total order book slow
moving orders is well below 1%.
GCC capex is on upswing in energy
and HC sector. Expect prioritization of investment to happen in GCC
countries.
There may be some decline in
international order inflow (due to US election and its policy on Middle East)
and compensated by domestic order inflow.
Completed 3 years in current
strategic plan – In five years of strategic plan the target Group Order inflow
is Rs 3.4 trillion at a CAGR of 14% in 5 years. Order book target is CAGR
growth of 15%. Group RoE target is 18%.
OI and OB in first 3 years achieved a CAGR of 20% and 18% is achieved in
3 years.
Panvel Data Centre (pilot size of
1.4 MW) gone live. Further the company
is setting up a 30 MW data centres off Kanchipuram near Chennai and this data
centre will come in two phases of 12MW and 18 MW. The company will also be
setting up a data centre between Mumbai and Bengaluru.
Hyderabad Metro received 900
crore cumulative support from Government of Telengana. Supposed to give RS 1000
crore a year for 3 years. In the first installment they now give Rs 900 core
and expect Rs 1100 crore in FY25 including the balance Rs 100 crore of FY24.
Continue to focus on profitable
execution of order book.
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