Mumbai, :
Larsen & Toubro achieved Consolidated Revenues of ₹ 34,773 crore for the quarter ended September 30, 2021, registering a y-o-y growth of 12%. The increase is attributed to project execution momentum with easing of regional lockdowns on progressive vaccination coverage and industry leading growth in the IT&TS portfolio. International sales during the quarter at ₹ 12,318 crore constituted 35% of the total revenue.
For the half-year ended September 30, 2021, the Consolidated Revenues at ₹ 64,108 crore recorded a y-o-y growth of 23% with international revenues during the half-year at ₹ 23,505 crore constituting 37% of the total.
The Consolidated Net Profit After Tax (excluding exceptional items and discontinued operations) for the quarter at ₹ 1,723 crore, registered a good growth of 56% over the corresponding quarter of the previous year. The growth is mainly driven by higher profits in the IT&TS portfolio and improved margins from the Projects & Manufacturing portfolio as the pandemic induced stress in previous periods progressively wanes out.
The Consolidated Net Profit After Tax (including exceptional items and discontinued operations) for the quarter at ₹ 1,819 crore includes ₹ 144 crore gain on divestment of stake in hydel power plant in Uttarakhand (a part of the Development Projects Segment) and tax expense of ₹ 47 crore arising on transfer of the NxT Digital Business from the Parent to Mindtree Limited.
For the half-year ended September 30, 2021, Consolidated Net Profit After Tax (including exceptional items and discontinued operations) at ₹ 2,994 crore declined by 49% y-o-y since the corresponding period of the previous year included the one-time gain on divestment of the Electrical & Automation business.
The Company bagged orders worth ₹ 42,140 crore during the quarter ended September 30, 2021, registering a robust growth of 50% over the corresponding period of the previous year. Orders were received in various segments like Oil & Gas, Metros, Rural Water Supply, Minerals and Metal, Public Space and Power Transmission and Distribution. The International orders at ₹ 22,116 crore during the quarter comprised 52% of the total order inflow
On a cumulative basis, the order inflow for the half-year ended September 30, 2021 stood at ₹ 68,697 crore, registering a growth of 33% over the corresponding period of the previous year. International orders at ₹ 31,161 crore during the half-year constituted 45% of the total.
The consolidated order book of the group was at ₹ 330,541 crore as on September 30, 2021, at near record levels, with international orders having a share of 23%.
Infrastructure Segment
Infrastructure segment secured orders of ₹ 12,108 crore, during the quarter ended September 30, 2021, registering a decline of 17% over the corresponding quarter of the previous year. International orders at ₹ 1,325 crore constituted 11% of the total order inflow for the quarter.
The segment order book stood at ₹ 242,673 crore as on September 30, 2021, with the share of international orders at 19%.
The segment recorded customer revenues of ₹ 13,923 crore for the quarter ended September 30, 2021, registering y-o-y growth of 7% with better execution momentum as workforce availability and supply chain improves post the lifting of lockdown. International revenues constituted 19% of the total customer revenues of the segment during the quarter.
The EBITDA margin of the segment during the quarter ended September 30, 2021 was at 8.3% vis-à-vis 6.4% recorded in the corresponding quarter of the previous year. Better job mix, tapering of stressed jobs in portfolio and higher site productivity aided the margin improvement.
Power Segment
The Power segment recorded order inflow of ₹ 143 crore for the quarter ended September 30, 2021, reflecting stagnation of fossil fuel power plant prospects, given the ESG concerns. International orders constituted 43% of the total order inflow.
The order book of the segment was at ₹ 11,678 crore as on September 30, 2021, with the share of international orders at 4%.
The segment recorded customer revenues of ₹ 1,114 crore for the quarter ended September 30, 2021, recording a growth of 62% over corresponding quarter of the previous year with projects in the order book gaining execution momentum. International revenues constituted 20% of the total customer revenues.
The segment EBITDA margin for the quarter ended September 30, 2021 was at 2.7%, lower compared to 3.1% of the corresponding quarter of the previous year, primarily due to an unfavorable composition of job mix in the current quarter.
Heavy Engineering Segment
The Heavy Engineering segment recorded an order inflow of ₹ 648 crore during the quarter ended September 30, 2021, recording a growth of 101% on corresponding quarter of the previous year with spurt of orders in Refinery and Oil & Gas segments. International orders constituted 35% of the total order inflow.
The order book of the segment was at ₹ 4,359 crore as on September 30, 2021, with the share of export orders at 31%.
The segment recorded customer revenues of ₹ 624 crore for the quarter ended September 30, 2021, recording a y-o-y growth of 4% on improved project execution. International sales comprised 44% of the total customer revenues for the quarter
The EBITDA margin of the segment at 15.7% for the quarter ended September 30, 2021 registered growth compared to 5.1% for the corresponding quarter of the previous year, since previous year had a one-time provision for a customer settlement in a completed international job.
Defence Engineering Segment
Defence Engineering segment recorded order inflow of ₹ 441 crore during the quarter ended September 30, 2021, registering decline of 67% over the corresponding quarter of the previous year, on account of deferral of awards. International orders constituted 12% of the total order inflow of the segment during the quarter.
The order book of the segment was at ₹ 7,254 crore as on September 30, 2021, with export orders constituting 9% of the total order book.
The segment recorded customer revenues of ₹ 845 crore during the quarter ended September 30, 2021, recording a y-o-y growth of 10% on the back of strong execution of projects in the Weapons & Engineering System business. The share of international revenues was 16% of the total customer revenues for the quarter.
The EBITDA margin for the quarter ended September 30, 2021 at 13.7% was lower compared to 24.4% for the corresponding quarter of the previous year, reflecting the phase of jobs under execution.
Hydrocarbon Segment
The Hydrocarbon Segment secured orders valued at ₹ 14,503 crore during the quarter ended September 30, 2021 registering significant growth over the corresponding quarter of the previous year. International order inflow constituted 90% of the total order inflow of the segment during the quarter.
The segment order book was at ₹ 50,380 crore as on September 30, 2021, with the international order book constituting 52%.
The segment posted customer revenues of ₹ 4,867 crore during the quarter ended September 30, 2021, recording a y-o-y growth of 20% with peaking of execution activities in the onshore vertical. International revenues had a share of 33% of the total customer revenues for the quarter.
The EBITDA margin of the segment at 8.3% for the quarter ended September 30, 2021 is marginally lower compared to corresponding quarter of the previous year at 8.5%.
IT & Technology Services (IT&TS) Segment
The segment comprises (a) L&T Infotech (b) L&T Technology Services and (c) Mindtree.
The segment recorded customer revenues of ₹ 7,876 crore during the quarter ended September 30, 2021, recording q-o-q growth of 9% & y-o-y growth of 28%, reflecting a surge in demand for more technology focused offerings triggered by the pandemic induced changes in client’s business models. International billing contributed 93% of the total customer revenues.
The EBITDA margin for the segment at 23.3% for the quarter ended September 30, 2021, is almost same as corresponding quarter of the previous year at 23.2% factoring improved delivery utilization, favorable on-site / off-shore job mix, off-set by increase in employee cost.
Financial Services Segment
The segment reflects the performance of L&T Finance Holdings, a listed subsidiary. The segment recorded income from operations at ₹ 2,976 crore during the quarter ended September 30, 2021, registering a y-o-y decline of 11% on account of targeted decline in the loan book
The Loan Book decreased to ₹ 86,936 crore as compared with September 2020 at ₹ 98,823 crore, reflecting a cautious lending approach, focus on collections, portfolio sell down, and a phased run down of the de-focused business portfolio.
The segment EBIT for the quarter ended September 30, 2021 marginally declined to ₹ 322 crore as compared to ₹ 328 crore during the corresponding quarter of the previous year.
Developmental Projects Segment
The segment recorded customer revenues of ₹ 1,170 crore during the quarter ended September 30, 2021, recording a marginal growth of 3% compared to corresponding quarter of previous year.
The segment EBIT for the quarter ended September 30, 2021 registers a loss of ₹ 35 crore as compared to loss of ₹ 17 crore during the corresponding quarter of the previous year.
“Others” Segment
“Others” segment comprises (a) Realty, (b) Construction & Mining Machinery, (c) Rubber Processing Machinery, (d) Industrial Valves and (e) Smart World and Communication businesses.
The customer revenues of this segment during the quarter ended September 30, 2021 at ₹ 1,379 crore, recorded a y-o-y growth of 4% with higher handover of residential flats in the Realty business and improved sales witnessed in the Construction Equipment and Rubber Processing Machinery businesses. Export sales at 8% of the total customer revenues majorly pertains to the export of Industrial Valves.
During the quarter ended September 30, 2021, the segment EBITDA margin at 20.8%, was higher compared to 18.0% in the corresponding quarter of the previous year, primarily on account of better sales mix in the Construction & Mining Equipment business.
Note: Segment-wise summary of performance for the quarter and half year ended September 30, 2021 is attached in the Annexure 1
Outlook
With the progressive weakening of the second Covid wave and sustained vaccination efforts, the overall business environment is looking more positive and this should lead to the Indian economy registering good growth in the medium term. The Production Linked Incentive (PLI) scheme announced by the Government for certain sectors is an important initiative to boost the manufacturing sector. Various high frequency indicators such as GST collections, auto sales, power consumption, import-export data indicate a sustained economic recovery.
The Government’s record vaccination efforts, a near normal monsoon along with the forthcoming festive season should further boost the demand led economic recovery across most segments. The recently announced Gati Shakti Plan by the Government aims at fast tracking the implementation of infrastructure projects listed under the National Infrastructure Pipeline. This, together with the Government’s National Monetization Plan will facilitate state led investments for infrastructure development. The positive outlook could be temporarily impacted on the possible occurrence of a third Covid wave.
The global economic outlook remains fairly strong, aided by governments macroeconomic and central banks monetary policy support. Although renewed outbreaks of the Delta variant are forcing some countries to restrict activities, the accelerated pace in the vaccination drives makes prospects for a sustained economic recovery firmer. The continuing high oil prices will positively favour the economic prospects of the GCC nations and give a fillip to several investment programmes. The global surge in commodity prices augurs well for capacity additions in the minerals & metals sector, but in the interim could pose headwinds to their consumption.
Amidst this scenario, the Company continues to focus on profitable execution of its large projects order book, leverage the strong growth momentum in its IT & TS portfolio, cost optimization measures through automation and intensive use of digital technologies, release of funds through improved working capital management and a phased divestment of noncore assets. The Company is confident of building on the current business momentum and is committed to creation of sustainable returns to its stakeholders.
Background:
Larsen & Toubro is an Indian multinational engaged in EPC Projects, Hi-Tech Manufacturing and Services. It operates in over 50 countries worldwide. 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 eight decades.