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.