Larsen & Toubro (L&T) on May 10, 2023, reported a 10 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 3,987 crore for the quarter ended March 31, 2023. The consolidated revenue for the quarter, too, rose 10 per cent YoY to Rs 58,335 crore. Both the top line and bottom line missed analysts' expectations. ZEE Business Research had projected L&T's consolidated revenue for the quarter under review to come in at Rs 59,311.1 crore, up 12.2 per cent year-on-year (YoY). The net profit of the company was expected to rise 16 per cent YoY to Rs 4182.8 crore.

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For the fiscal year 2022-23, the company achieved consolidated revenue of Rs 183,341 crore, recording a YoY growth of 17 per cent, aided by strong execution of a large order book in the Infrastructure Projects segment and robust momentum in the IT&TS portfolio. International revenues during the year at Rs  68,787 crore, constituted 38 per cent of the total revenue, the company said in its press release.

The company also declared a final dividend of Rs 24 per equity share. 

For the full year, L&T posted a total consolidated profit after tax (PAT) of Rs 10,471 crore, registering a growth of 21 per cent compared to the previous year. "The PAT includes an exceptional gain of Rs 97 crore (net), attributed to profit on the divestment of the Mutual Fund business of the Financial Services segment partly off-set by a one-time charge due to remeasurement of the wholesale loan assets of the Financial Services segment at fair value," the earnings release added.

ORDER INFLOW

L&T received orders worth Rs 230,528 crore at the group level during the year ended March 31, 2023, registering a YoY growth of 19 per cent. During the year, orders were received across multiple segments like Public Spaces, Hydel & Tunnels, Irrigation Systems, Ferrous Metals, Oil & Gas, Power Transmission & Distribution and Defence sectors, the press release said. For the March quarter,  order inflow stood at Rs 76,099 crore, registering a growth of 3 per cent over the corresponding quarter of the previous year. 

Infrastructure Projects Segment

The segment secured orders of Rs 41,187 crore, during the quarter that ended March 31, 2023, registering a degrowth of 9 per cent largely due to a high base, over the corresponding quarter of the previous year. International orders constituted 29 per cent of the total order inflow for the quarter. 

Energy Projects Segment

The segment secured orders of Rs 8,892 crore, during the quarter ended March 31, 2023, registering a healthy growth of 17 per cent over the corresponding quarter of the previous year on the receipt of multiple international orders in Hydrocarbon business. International orders constituted a majority of the total order inflow for the quarter.

Hi-Tech Manufacturing Segment

The segment secured orders of Rs 8,573 crore, during the quarter ended March 31, 2023, registering a significant growth of 41 per cent over the corresponding quarter of the previous year. International orders constituted 9 per cent of the total order inflow for the quarter. The order book of the segment was at Rs 26,214 crore as of March 31, 2023, with the share of export orders at 13 per cent. The segment secured orders of Rs 8,573 crore, during the quarter ended March 31, 2023, registering a significant growth of 41 per cent over the corresponding quarter of the previous year. International orders constituted 9 per cent of the total order inflow for the quarter. The order book of the segment was at Rs 26,214 crore as of March 31, 2023, with the share of export orders at 13 per cent.

FORWARD-LOOKING STATEMENT

The last two years have seen the global economy striving to deal with overlapping crises, the latest being the liquidity troubles after a series of global bank crises. While the impact appears to have been contained, these uncertainties continue to undermine the confidence among consumers and businesses to spend, thereby impacting global growth, the company said in its press release. 

However, a combination of China’s reopening, a significant easing of the natural gas crisis in Europe and resilient US consumer confidence should help the global economy across the current uncertainty overhang. With OPEC and partner countries announcing unexpected production cuts, oil prices are likely to remain firm at current levels, aiding the Gulf Cooperation Council (GCC) nations to pursue their capex plans in oil, infrastructure, green energy and other industrial sectors, it added.

"The Company will focus with cautious optimism on large project wins, timely execution of its large order book, growth of its services portfolio in the stated glide path, and preservation of liquidity and optimum use of capital and other resources. The company is optimistic about its growth aspirations in the medium term despite an uncertain macro environment," it said.

Expert View | Khadija Mantri, Associate VP Research Analyst at Sharekhan by BNP Paribas

L&T’s Q4FY23 consolidated numbers were below our estimates. Revenue/OPM/ PAT fell short of expectations by 3.3 per cent/~30 bps/~6 per cent. Consolidated revenue grew by nearly 10 per cent YoY to Rs 58,335 crore. Revenue growth was driven by energy and hi-tech manufacturing segments, while its largest- infrastructure segment grew at a moderate pace of 5 per cent YoY. Operating profit increased at a slower pace by nearly 5 per cent YoY to Rs 6,833 crore. Operating Profit Margin or OPM, thus, came in lower by 60 bps y-o-y to 11.7 per cent. Net profit grew by nearly 10 per cent YoY to Rs 3,986 crore aided by higher other income. The company reported 19 per cent YoY growth in order inflows surpassing its guidance of 12-15 per cent growth. The order inflow for the quarter and year stands at Rs 76,072 crore/Rs 2,30,528 crore, respectively. The order book grew by 12 per cent YoY to Rs 3,99,526 crore.