Result Analysis: Larsen & Toubro Limited

(CMP: Rs.2114.60)

Result Update: Q3FY23

Larsen & Toubro Limited is India’s leading technology, engineering, construction, manufacturing and financial services company. The Company’s segments include Infrastructure, which is engaged in engineering and construction of building and factories; Power, which offers solutions for thermal power plants; Metallurgical & Material Handling, which consists of solutions for ferrous and non-ferrous metal industries; Heavy Engineering, which manufactures and supplies custom designed, engineered critical equipment and systems.

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    Stock Details
    Market Cap. (Cr.) 297178
    Equity (Cr.) 281.07
    Face Value 2
    52 Wk. high/low 2297 / 1457
    BSE Code 500510
    NSE Code LT
    Book Value (Rs.) 582.3
    Sector Infrastructure
    Key Ratios
    Debt-equity: 1.62
    ROCE (%): 11.3
    ROE (%): 13
    TTM EPS: 68.36
    P/BV: 3.6
    TTM P/E: 30.93

    Financial  Performance:

    Result Highlights:

    • L&T achieved Consolidated Revenues of ₹ 46,390 crore for the 3QFY23 recording a growth of 17.26% YoY and 8.48% QoQ. International revenues during the quarter at ₹ 17,317 crore constituted 37% of the total revenue.

    • The company’s EBITDA grew by 14.27% YoY and 3.47% QoQ to ₹5,828.07 Whereas the EBITDA margin stood at 12.56% in 3QFY23 down by 33 bps YoY and by 61 bps sequentially.

    • The Company for the 3QFY23, posted a total Consolidated PAT of ₹ 2,553 crore, registering a robust growth of 22.79% YoY. On the other hand PAT margin grew by 30bps YoY and by 2bps on sequential basis

    • For the 9QFY23, the PAT is at ₹ 6,484 crore, registering a growth of 28% YoY basis.

    • The Company received orders worth ₹ 60,710 crore at the group level during the quarter ended December 31, 2022, registering a growth of 21% over the corresponding quarter of the previous year

    • On a cumulative basis, the order inflow for the nine months ended December 31, 2022 stood at ₹ 154,429 crore, registering a growth of 30% y-o-y. International orders at ₹ 50,478 crore constituted 33% of the total.

    • The consolidated order book of the group was at ₹ 386,588 crore as on December 31, 2022, with international orders having a share of 26%.

    • During the quarter, orders were received across multiple segments like Oil & Gas, Public Spaces, Hydel & Tunnels, Irrigation systems, Ferrous Metals and Power Transmission & Distribution. International orders at ₹ 15,294 crore during the quarter comprised 25% of the total order inflow.

    • In Q3FY23, domestic order inflows grew 53% YoY to ₹42500 crore while for 9MFY23, the same grew 54% YoY. With respect to international markets, ordering was flat to negative as most tenders facing a delay in ordering have spilled over to Q4FY23E. On the green hydrogen, the company has invested ₹35 crore in a pilot project.

    • For the 3QFY23 Infrastructure Projects contributed 47.23%, Energy Projects 13.50%, Hi-Tech Manufacturing 3.96%, IT & Technology Services22.56%, Financial Services 7.12%,  Development Projects 2.35%, and Others 3.27% to the total revenue of the company.

    • L&T will focus on emerging portfolios like manufacturing of electrolysers, green EPC, battery & cell manufacturing, data centres and platforms (Sufin & Edutech) in the next five years.

    • MCO expense variation is reflective of activity levels, job mix and cost pressures, Resource augmentation and salary hikes across services businesses drives staff cost.

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 0%
    FIIs 25.34%
    DIIs 39.43%
    Public 33.93%
    Others 1.30%


    L&T reported a decent set of Q3FY23 numbers, aided by improved execution in the Infrastructure Projects segment and continued growth momentum in the IT&TS portfolio. Drop in EBIDTA margin was mainly due to merger integration costs in LTIMindtree and higher staff cost in services portfolio. With the strong order book of Rs.3866bn the Company possesses the necessary capability and flexibility to continuously rebalance its approach and strategy in order to benefit from the dynamic business environment. For the nine months of FY23 L&T has reported the earnings of Rs.46.14 and we expect the company to close the FY23 at the eEPS of Rs.61.52. Based on the estimated earnings the company is available at PEx of 34.37 at the current market price.


    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22      QoQ %          YoY% 9MFY23 9MFY22          YoY%
    Revenue from Operations 46,389.72 42,762.61 39,562.92 8.48% 17.26% 1,25,005.55 1,03,670.55 20.58%
    Other Income 755.03 738.53 571.39 2.23% 32.14% 2,188.27 1,751.49 24.94%
    Total Income 47,144.75 43,501.14 40,134.31 0 17.47% 1,27,193.82 1,05,422.04 20.65%
    Manufacturing, construction and operating expenses 27,807.15 25,284.96 23,880.44 9.98% 16.44% 72,622.92 59,131.86 22.82%
    Finance cost of financial services business and finance lease activity 1,580.43 1,468.32 1,453.52 7.64% 8.73% 4,505.15 4,510.71 -0.12%
    Employee benefits expense 9,532.50 9,154.41 7,621.04 4.13% 25.08% 27,233.01 21,730.81 25.32%
    Sales, administration and other expenses 2,396.60 1,961.08 2,079.13 22.21% 15.27% 6,724.16 6,609.25 1.74%
    EBITDA 5,828.07 5,632.37 5,100.18 3.47% 14.27% 16,108.58 13,439.41 19.86%
    EBITDA Margin (%) 12.56% 13.17% 12.89% -61 bps  -33 bps 12.89% 12.96% -7 bps
    Finance Cost 802.45 835.65 813.80 -3.97% -1.39% 2,394.15 2,420.60 -1.09%
    Depreciation & Amortisation expense 825.18 860.17 732.46 -4.07% 12.66% 2,648.75 2,178.60 21.58%
    Net exceptional gain/(loss) 135.99 0.00 0.00 #DIV/0! #DIV/0! 135.99 96.93 40.30%
    Profit Before Tax 4,336.43 3,936.55 3,553.92 10.16% 22.02% 11,201.67 8,937.14 25.34%
    Tax 1,270.50 1,117.35 1,057.06 13.71% 20.19% 3,023.54 2,652.77 13.98%
    Profit After Tax 3,065.93 2,819.20 2,496.86 8.75% 22.79% 8,178.13 6,284.37 30.13%
    PAT Margin (%) 6.61% 6.59% 6.31% 2 bps 30 bps 6.54% 6.06% 48 bps
    EPS (in Rs.) 18.17 15.86 14.63 14.56% 24.20% 46.14 35.94 28.38%
    Segment Income (In Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY% 9MFY23 9MFY22 YoY% Segment %
    Infrastructure Projects 22,205.65 19,668.21 18,619.03 12.90% 19.26% 56,274.37 43,318.88 29.91% 47.23%
    Energy Projects 6,346.15 5,593.41 5,967.64 13.46% 6.34% 17,027.08 16,935.54 0.54% 13.50%
    Hi-Tech Manufacturing 1,863.07 1,588.94 1,548.47 17.25% 20.32% 4,840.08 4,401.27 9.97% 3.96%
    IT & Technology Services 10,605.05 10,183.91 8,497.96 4.14% 24.80% 30,249.18 23,641.80 27.95% 22.56%
    Financial Services 3,348.59 3,151.86 2,970.55 6.24% 12.73% 9,458.59 9,007.68 5.01% 7.12%
    Development Projects 1,106.68 1,344.60 975.56 -17.69% 13.44% 3,796.67 3,271.77 16.04% 2.35%
    Others 1,535.96 1,743.17 1,512.64 -11.89% 1.54% 4,911.03 4,351.19 12.87% 3.27%
    Total 47,011.15 43,274.10 40,091.85 8.64% 17.26% 1,26,557.00 1,04,928.13 20.61% 100.00%
    Less: Inter-segment revenue 621.43 511.49 528.93 21.49% 17.49% 1,551.45 1,257.58 23.37%
    Income from Operations 46,389.72 42,762.61 39,562.92 8.48% 17.26% 1,25,005.55 1,03,670.55 20.58%
    Source: Company website, EWL Research

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