Budget News

Larsen & Toubro
November 04,2022 02:00

Consolidated net sales of Larsen & Toubro for the quarter ended Sep 2022 hasincreased 22.98% to Rs 42762.61 crore with revenue of project &Manufacturing (P&M) was up 23% (to 28593.73 crore), that of services was up23% (to Rs 13335.77 crore) and that of concession was up 15% to Rs 1344.60crore. The EBIT Was up 24% to RS 4444.84 crore driven by 11% growth insegment profit of P&M business to Rs 1950.35 crore gained largely by highersales as its segment margin contact by 80 bps to 6.8%. The services businessprofit was up 35% to Rs 2506.02 crore gained by higher sales and higher margin. Theloss of concession business was lower at Rs 11.53 crore compared to a loss ofRs 35.43 crore. Operating profit margin has declined from 11.49% to 11.46%,leading to 22.64% rise in operating profit to Rs 4,899.43 crore. Rawmaterial cost as a % of total sales (net of stock adjustments) decreased from12.43% to 9.29%. Purchase of finished goods cost fell from 0.72% to0.69%. Employee cost increased from 20.55% to 20.75%. Other expenses rose from 54.98% to 58.18%. Selling andadministration expenses rose from 10.09% to 17.30%. Stores consumedfor sales rose from 1.92% to 2.52%. Expenses from contract fellfrom 14.84% to 14.70%. Construction development cost rose from16.55% to 21.73%. Other direct service cost fell from 15.22% to14.81%. Other income rose 38.78% to Rs 738.53crore. PBIDT rose 24.54% to Rs 5637.96 crore. Provisionfor interest rose 7.23% to Rs 835.65 crore. PBDT rose 28.14% to Rs4802.31 crore. Provision for depreciation rose 18.03% to Rs 860.17crore. Profit before tax grew 30.58% to Rs 3,942.14crore. Provision for tax was expense of Rs 1122.94 crore, comparedto Rs 884.52 crore. Effective tax rate was 28.73% compared to28.38%. Minority interest increased 34.85% to Rs 556.29 crore. Netprofit attributable to owners of the company increased 22.51% to Rs 2,228.97crore.

Sales of InfrastructureProjects segment has gone up 38.94% to Rs 19,668.21 crore (accounting for45.45% of total sales). Sales of IT & Technology Servicessegment has gone up 28.99% to Rs 10,183.91 crore (accounting for 23.53% oftotal sales). Sales of Financial Services segment has gone up 5.92%to Rs 3,151.86 crore (accounting for 7.28% of total sales). Sales ofDevelopment Projects segment has gone up 14.93% to Rs 1,344.60 crore(accounting for 3.11% of total sales). Sales of segment has gone up18.39% to Rs 1,743.17 crore (accounting for 4.03% of totalsales). Sales of Hi-Tech Manufacturing segment has gone up 3.65% toRs 1,588.94 crore (accounting for 3.67% of total sales). Sales ofEnergy Projects segment fell 6.81% to Rs 5,593.41 crore (accounting for 12.93%of total sales). Inter-segment sales rose Rs 431.61 crore to Rs511.49 crore.

Profit before interest, tax and other unallocable items (PBIT) hasjumped 24.42% to Rs 4,444.84 crore. PBIT of Infrastructure Projectssegment rose 9.77% to Rs 1,066.79 crore (accounting for 24.00% of totalPBIT). PBIT of IT & Technology Services segment rose 23.88% toRs 1,892.80 crore (accounting for 42.58% of total PBIT). PBIT ofFinancial Services segment rose 90.65% to Rs 613.22 crore (accounting for13.80% of total PBIT). PBIT of Development Projects segment rose67.46% to Rs -11.53 crore (accounting for -0.26% of totalPBIT). PBIT of segment fell 10.94% to Rs 242.69 crore (accountingfor 5.46% of total PBIT). PBIT of Hi-Tech Manufacturing segment rose28.18% to Rs 221.63 crore (accounting for 4.99% of total PBIT). PBITof Energy Projects segment rose 22.89% to Rs 419.24 crore (accounting for 9.43%of total PBIT).

PBIT margin of Infrastructure Projects segment fell from 6.87% to5.42%. PBIT margin of IT & Technology Services segment fell from19.35% to 18.59%. PBIT margin of Financial Services segment rosefrom 10.81% to 19.46%. PBIT margin of Development Projects segmentrose from negative 3.03% to negative 0.86%. PBIT margin of segmentfell from 18.51% to 13.92%. PBIT margin of Hi-Tech Manufacturingsegment rose from 11.28% to 13.95%. PBIT margin of Energy Projectssegment rose from 5.68% to 7.50%. Overall PBIT margin rose from10.15% to 10.27%.

Half-yearly performance

Net sales (including other operating income) of Larsen & Toubro hasincreased 22.63% to Rs 78615.81 crore. Sales of InfrastructureProjects segment has gone up 37.93% to Rs 34,068.72 crore (accounting for42.83% of total sales). Sales of IT & Technology Servicessegment has gone up 29.72% to Rs 19,644.13 crore (accounting for 24.70% oftotal sales). Sales of Financial Services segment has gone up 1.21%to Rs 6,110.00 crore (accounting for 7.68% of total sales). Sales ofDevelopment Projects segment has gone up 17.15% to Rs 2,689.99 crore(accounting for 3.38% of total sales). Sales of Others segment hasgone up 18.90% to Rs 3,375.06 crore (accounting for 4.24% of totalsales). Sales of Hi-Tech Manufacturing segment has gone up 4.35% toRs 2,977.01 crore (accounting for 3.74% of total sales). Sales ofEnergy Projects segment fell 2.62% to Rs 10,680.93 crore (accounting for 13.43%of total sales). Inter-segment sales rose Rs 728.65 crore to Rs930.03 crore.

Profit before interest, tax and other unallocable items (PBIT) hasjumped 26.31% to Rs 8,021.93 crore. PBIT of Infrastructure Projectssegment rose 14.68% to Rs 1,752.97 crore (accounting for 21.85% of totalPBIT). PBIT of IT & Technology Services segment rose 27.05% toRs 3,667.65 crore (accounting for 45.72% of total PBIT). PBIT ofFinancial Services segment rose 74.41% to Rs 968.77 crore (accounting for12.08% of total PBIT). PBIT of Development Projects segment rose74.14% to Rs -32.63 crore (accounting for -0.41% of total PBIT). PBITof Others segment rose 4.29% to Rs 494.31 crore (accounting for 6.16% of totalPBIT). PBIT of Hi-Tech Manufacturing segment rose 0.44% to Rs 371.93crore (accounting for 4.64% of total PBIT). PBIT of Energy Projectssegment rose 20.68% to Rs 798.93 crore (accounting for 9.96% of totalPBIT).

PBIT margin of Infrastructure Projects segment fell from 6.19% to5.15%. PBIT margin of IT & Technology Services segment fell from19.06% to 18.67%. PBIT margin of Financial Services segment rosefrom 9.20% to 15.86%. PBIT margin of Development Projects segmentrose from negative 5.49% to negative 1.21%. PBIT margin of Otherssegment fell from 16.70% to 14.65%. PBIT margin of Hi-TechManufacturing segment fell from 12.98% to 12.49%. PBIT margin of EnergyProjects segment rose from 6.04% to 7.48%. Overall PBIT margin rosefrom 9.80% to 10.08%.

Operating profit marginhas jumped from 11.18% to 11.27%, leading to 23.58% rise in operating profit toRs 8,856.10 crore. Raw material cost as a % of total sales (net ofstock adjustments) decreased from 12.46% to 10.20%. Purchase offinished goods cost fell from 0.76% to 0.62%. Employee costincreased from 21.70% to 21.73%. Other expenses rose from 54.07% to56.59%. Selling and administration expenses rose from 8.47% to15.98%. Stores consumed for sales rose from 1.76% to 2.62%. Expenses from contract fell from 13.85% to 12.29%. Construction development cost rose from 15.42% to 21.28%. Other direct service cost fell from 16.09% to 15.11%.

Other income rose 21.45% to Rs 1433.25 crore. PBIDTrose 23.28% to Rs 10289.35 crore. Provision for interest fell 0.94%to Rs 1591.7 crore. Loan funds rose to Rs 1,29,071.26 crore as of 30September 2022 from Rs 1,27,071.72 crore as of 30 September 2021. Inventoriesrose to Rs 6,371.44 crore as of 30 September 2022 from Rs 5,800.36 crore as of30 September 2021. Sundry debtors were higher at Rs 44,011.34 croreas of 30 September 2022 compared to Rs 39,293.11 crore as of 30 September2021. Cash and bank balance rose to Rs 17,577.82 crore as of 30September 2022 from Rs 17,446.40 crore as of 30 September2021. Investments rose to Rs 38,991.89 crore as of 30 September 2022from Rs 37,023.67 crore as of 30 September 2021 .

PBDT rose 29.05% to Rs 8697.65 crore. Provision fordepreciation rose 26.10% to Rs 1823.57 crore. Fixed assets increasedto Rs 18,540.46 crore as of 30 September 2022 from Rs 16,778.78 crore as of 30September 2021. Intangible assets declined from Rs 27,114.67 croreto Rs 25,834.77 crore.

Profit before tax grew29.86% to Rs 6,874.08 crore. Share of profit/loss was 312.81% lowerat Rs -98.62 crore. Provision for tax was expense of Rs 1761.87crore, compared to Rs 1602.96 crore. Effective tax rate was 26.00%compared to 29.87%.

Minority interest increased 40.64% to Rs 1,082.55crore. Net profit attributable to owners of the company increased31.30% to Rs 3,931.04 crore.

Equity capital increased from Rs 280.93 crore as of 30 September2021 to Rs 281.04 crore as of 30 September 2022. Per share faceValue remained same at Rs 2.00.

Cash flow from operating activities decreased to Rs 629.28 crorefor YTD ended September 2022 from Rs 11,450.77 crore for YTD ended September2021. Cash flow used in acquiring fixed assets during the YTD endedSeptember 2022 stood at Rs 1,666.88 crore, compared to Rs 965.66 crore duringthe YTD ended September 2021.

Order book update

Consolidated order book of the group asend of Sep 30, 2022 stood at Rs 372381crore with international orders having ashare of 28%.

Group order inflow in Q2FY23 was Rs51914 crore, a growth of 23%YoY. Q2FY23 order inflow was driven largely by Infra and hydro carbon segments.

Order inflow for H1FY23 stood at Rs 93720 crore, registering agrowth of 36%YoY. Of which Internationalorders were at Rs 35184 crore during the half-year constituted 38% of the total.

Outlook

The Indian economy is doing relatively well and isexpected to continue its growth momentum, albeit at a slower pace than earlier anticipated.High inflation, coupled with threat of an adverse BoP amidst the increasinguncertain global economic environment are possible headwinds to the country'sgrowth trajectory. Large value private sector investments that was set for amajor revival may get delayed due to the persisting geopolitical and globaleconomic turbulence. On a positive note, the Government with success of itsproduction linked incentives (PLI) scheme, is likely to expand it to moresectors. The Government is expected to intensify its efforts on structuralreforms in critical areas such as labour, logistics, health and education.Robust tax collections this year will enable the government to sustain budgetedinvestment programmes. Another silver lining is the visibility of a continuingdomestic consumption demand, that augurs well for new investments. On theglobal front, the economic outlook is clouded by key downside risks, viz., theconflict in eastern Europe impacting food & energy supply chains, gradualpolarization and possibility of stagflation resulting from supply led inflationin an uncertain demand environment. Amidst this visible global turmoil, the GCCregion, a major geography for the Company's Projects business continues toinvest in the oil & gas sector to accelerate production capacity. Besides,some of the GCC countries with long term strategy to reduce dependence on oileconomy, are focusing on building non-oil sector, viz. metals, renewableenergy, infrastructure development etc. The Company is confident of the IndianGovernments' various reform and economic measures to provide the rightinvestment and growth climate, aided by the country demonstrating resilience tothe global challenges. The Company's Projects & Hi-Tech Manufacturingbusinesses are rightly positioned to leverage the India and Middle East capexopportunity and with tech enabled skill sets and offerings, the IT&TSbusiness will continue to pursue growth in the global services domain. TheCompany's strategy of focusing on Projects, Hi-Tech Manufacturing and IT&TSservices in a rapidly changing global business environment is expected toprovide improved returns to all its stakeholders.

Larsen & Toubro : Consolidated Results

	Quarter ended			Year to Date			Year ended
Particulars	202209	202109	Var.(%)	202209	202109	Var.(%)	202203	202103	Var.(%)
Net Sales (including other operating income)	42,762.61	34,772.90	22.98	78,615.81	64,107.63	22.63	1,56,521.23	1,35,979.03	15.11
OPM (%)	11.46	11.49	-3 bps	11.27	11.18	9 bps	11.64	17.15	-551 bps
OP	4,899.43	3,994.87	22.64	8,856.10	7,166.36	23.58	18,217.30	23,315.14	-21.86
Other Inc.	738.53	532.14	38.78	1,433.25	1,180.11	21.45	2,267.08	3,429.35	-33.89
PBIDT	5,637.96	4,527.01	24.54	10,289.35	8,346.47	23.28	20,484.38	26,744.49	-23.41
Interest	835.65	779.34	7.23	1,591.70	1,606.80	-0.94	3,125.70	11,604.48	-73.06
PBDT	4,802.31	3,747.67	28.14	8,697.65	6,739.67	29.05	17,358.68	15,140.01	14.65
Depreciation	860.17	728.75	18.03	1823.57	1446.13	26.10	2947.95	2904.21	1.51
PBT	3,942.14	3,018.92	30.58	6874.08	5293.54	29.86	14410.73	12235.8	17.78
Share of Profit/(Loss) from Associates	-33.94	0.63	PL	-98.62	-23.89	-312.81	128.19	14.4	790.21
PBT before EO	3908.2	3019.55	29.43	6775.46	5269.65	28.58	14538.92	12250.2	18.68
EO Income	0	96.93	-	0	96.93	-	96.93	-3556.02	LP
PBT after EO	3908.2	3116.48	25.40	6775.46	5366.58	26.25	14635.85	8694.18	68.34
Taxation	1122.94	884.52	26.95	1761.87	1602.96	9.91	4216.61	4010.82	5.13
PAT	2785.26	2231.96	24.79	5013.59	3763.62	33.21	10419.24	4683.36	122.47
Minority Interest (MI)	556.29	412.51	34.85	1082.55	769.73	40.64	1749.91	1338.35	30.75
Net profit	2228.97	1819.45	22.51	3931.04	2993.89	31.30	8669.33	3345.01	159.17
P/(L) from discontinued operations net of tax	0	0	-	0	0	-	0	8237.92	-
Net profit after discontinued operations	2228.97	1819.45	22.51	3931.04	2993.89	31.30	8669.33	11582.93	-25.15
EPS (Rs)*	15.86	12.55	26.44	27.98	20.92	33.73	61.29	33.52	82.87

* EPS is on current equity of Rs 281.04 crore, Face value of Rs 2, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database

Larsen & Toubro : Consolidated Segment Results

	Quarter ended				Year to Date				Year ended
	% of (Total)	202209	202109	Var.(%)	% of (Total)	202209	202109	Var.(%)	% of (Total)	202203	202103	Var.(%)
Sales
Infrastructure Projects	45.45	19,668.21	14,156.39	38.94	42.83	34,068.72	24,699.85	37.93	46.38	73,560.09	61,961.64	18.72
Power	0.00	0.00	0.00	-
IT & Technology Services	23.53	10,183.91	7,895.12	28.99	24.70	19,644.13	15,143.84	29.72	20.46	32,455.29	25,618.76	26.69
Financial Services	7.28	3,151.86	2,975.74	5.92	7.68	6,110.00	6,037.13	1.21	7.55	11,971.10	13,403.55	-10.69
Development Projects	3.11	1,344.60	1,169.91	14.93	3.38	2,689.99	2,296.21	17.15	2.75	4,367.52	3,621.43	20.60
	4.03	1,743.17	1,472.38	18.39	4.24	3,375.06	2,838.55	18.90	3.95	6,261.91	6,092.75	2.78
Hi-Tech Manufacturing	3.67	1,588.94	1,532.99	3.65	3.74	2,977.01	2,852.80	4.35
Energy Projects	12.93	5,593.41	6,001.98	-6.81	13.43	10,680.93	10,967.90	-2.62
Total Reported Sales	100.00	43,274.10	35,204.51	22.92	100.00	79,545.84	64,836.28	22.69	100.00	1,58,593.84	1,38,888.84	14.19
Less: Inter segment revenues		511.49	431.61	18.51		930.03	728.65	27.64		2,072.61	1,304.14	58.93
Net Sales	100.00	42,762.61	34,772.90	22.98	100.00	78,615.81	64,107.63	22.63	100.00	1,56,521.23	1,37,584.70	13.76
PBIT
Infrastructure Projects	24.00	1,066.79	971.87	9.77	21.85	1,752.97	1,528.60	14.68	31.57	5,182.41	4,521.54	14.62
Power	0.00	0.00	0.00	-
IT & Technology Services	42.58	1,892.80	1,527.92	23.88	45.72	3,667.65	2,886.81	27.05	38.58	6,333.19	4,823.20	31.31
Financial Services	13.80	613.22	321.64	90.65	12.08	968.77	555.47	74.41	8.95	1,469.80	1,285.78	14.31
Development Projects	-0.26	-11.53	-35.43	67.46	-0.41	-32.63	-126.16	74.14	-1.40	-230.59	-196.55	-17.32
	5.46	242.69	272.49	-10.94	6.16	494.31	473.96	4.29	6.19	1,015.77	1,122.96	-9.55
Hi-Tech Manufacturing	4.99	221.63	172.90	28.18	4.64	371.93	370.31	0.44
Energy Projects	9.43	419.24	341.14	22.89	9.96	798.93	662.01	20.68
Total PBIT	100.00	4,444.84	3,572.53	24.42	100.00	8,021.93	6,351.00	26.31	100.00	16,414.65	14,227.07	15.38
Less : Interest		835.65	779.34	7.23		1,591.70	1,606.80	-0.94		3,125.70	3,913.44	-20.13
Add: Other un-allcoable		332.95	322.66	3.19		443.85	669.04	-33.66		1,218.71	-1,771.61	LP
PBIT Margin(%)
Infrastructure Projects		5.42	6.87	-144.13		5.15	6.19	-104.33		7.05	7.30	-25.22
Power		0.00	0.00	0.00		0.00	3.48	-348.36
	0.00	16.18	-1,617.77
	0.00	5.25	-525.45
	0.00	8.07	-807.16
IT & Technology Services		18.59	19.35	-76.65		18.67	19.06	-39.21		19.51	18.83	68.68
Financial Services		19.46	10.81	864.71		15.86	9.20	665.46		12.28	9.59	268.51
Development Projects		-0.86	-3.03	217.09		-1.21	-5.49	428.13		-5.28	-5.43	14.78
		13.92	18.51	-458.44		14.65	16.70	-205.13		16.22	18.43	-220.97
	0.00	18.09	-1,809.26
Hi-Tech Manufacturing		13.95	11.28	266.97		12.49	12.98	-48.72		16.03	0.00	1,602.58
Energy Projects		7.50	5.68	181.15		7.48	6.04	144.41		6.92	0.00	691.65
PBT	100.00	3,942.14	3,115.85	26.52	100.00	6,874.08	5,413.24	26.99	100.00	14,507.66	8,542.02	69.84

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