Larsen & Toubro on January 30 reported 14 percent jump in net profit at Rs 3,359 crore for the quarter ended December 31, 2024. It reported net profit of Rs 2,947 crore in the year-ago period. The firm's revenue rose 17 percent to Rs 64,668 crore in Q3FY25 as against Rs 55,128 crore in Q3FY24.
However, the company's topline and bottomline missed street expectations as its operating margins or Earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins contracted 70 basis points on year to 9.7 percent.
The company's operating margins fell mainly due to a 50 percent jump in cost of raw materials and components consumed and a 16 percent rise in construction materials consumed seen during the quarter.
According to the average of a Moneycontrol poll of six brokerages, the revenue of the engineering, procurement, and construction (EPC) major was likely to increase nearly 18 percent year-on-year (YoY) to Rs 65,065 crore. Net profit was expected to increase around 24 percent YoY from Rs 2,947 crore.
L&T won orders worth Rs 1,16,036 crore at the group level during Q3, logging a 53 percent growth over the corresponding quarter of the previous year when it had won orders worth Rs 75,990 crore.
During the reporting quarter, orders were received across multiple segments, including thermal power, renewable, power transmission, precision engineering, minerals & metals, water, commercial buildings and hydrocarbon onshore.
International orders at Rs 62,059 crore during the quarter comprised 53 percent of the total order inflow. Last year, L&T had international orders worth Rs 50,562 crore which accounted for 67 percent of its total order inflow
The group’s consolidated order book was at Rs 564,223 crore as of the end of December, with international orders having a share of 42 percent. Last year, L&T had ended the same period with a group consolidated order book of Rs 469,807 crore.
Its operating margin for the third quarter of FY2024-25 came in at 9.7 percent, compared to 10.4 percent in the year-ago quarter and 10.3 percent in the June quarter.
The company's Earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in at Rs 6,255 crore during the quarter 9 percent higher on year, but lower than market expectations.
Analysts had expected the company's EBITDA to grow 18 percent from a year ago, to around Rs 6,779.03 crore for the reporting period.
Infrastructure Projects Segment
Segment-wise, L&T’s infrastructure projects segment secured order inflows of Rs 49,070 crore, during the quarter that ended December 31, 2024, which was 13.6 percent higher when compared to the corresponding quarter of the previous year.
The segment order book stood at Rs 361,282 crore as on December 31, 2024, with the share of international orders at 37 percent.
Revenues from the segment rose 15.4 percent on year to Rs 32,134 crore while profit from the segment rose 17.4 percent on year to Rs 1,414.76 crore.
The rise in profit was mainly on account of a rise in execution in the segment as operating profit margin from the segment remain unchanged on year at 5.5 percent.
L&T's infrastructure projects segment had seen a sequential fall in operating margins for the seven quarters till Q3FY24 as the company won infrastructure projects at very aggressive prices after the post-COVID-19, post-Russia-Ukraine (conflict) period in 2022-23.
Energy Projects Segment
L&T secured order inflows of Rs 38,818 crore in this segment, during the quarter that ended December 31, 2024, which was nearly three times higher when compared to the corresponding quarter of the previous year when the company had won orders worth Rs 13,281 crore.
Energy Projects' Segment order book stood at Rs 145,827 crore as on December 31, 2024, with the international order book constituting 66 percent. L&T witnessed a significant rise order inflows coming from the Indian domestic market in this segment following the government’s renewed focus on setting up thermal power projects and a surge in demand for coal-fuelled power generation.
In November 2024, L&T had announced that has received a ‘limited notice to proceed’ (LNTP) from NTPC for setting up thermal power plants worth over Rs 15,000 crore.
Revenues from the segment rose 40.5 percent on year to Rs 11,051 crore while profit from the segment rose 21 percent on year to Rs 838.64 crore.
The EBITDA margin of the segment fell to 8.3 percent for the quarter that ended December 31, 2024, from 9.7 percent over the corresponding quarter of the previous year.
Hi-Tech Manufacturing Segment
L&T secured order inflows of Rs 8,423 crore in this segment, during the quarter that ended December 31, 2024, which more than four times higher when compared to the corresponding quarter of the previous year.
The Hi-Tech Manufacturing Segment order book stood at Rs 41,769 crore as of December 31, 2024, with the international order book constituting 11 percent of all orders.
The company's chief financial officer R Shankar Raman said that order inflow in the company's Hi-Tech Manufacturing segment has picked up significantly following the new government coming to power in July 2024.
Last year, Raman had pointed out that order inflow in the segment would been slow in FY24 due to the delays in the government awarding defense contracts.
Revenues from the segment rose 17.8 percent on year to Rs 2,433 crore while profit from the segment rose 32 percent on year to Rs 388.6 crore.
IT & Technology Services Segment
L&T's revenues from this segment rose to Rs 12,061 crore during the quarter that ended December 31, 2024, which was 7.7 percent higher when compared to the corresponding quarter of the previous year.
Despite the slower rise in topline from the segment in Q3FY25, L&T expects the segment to report higher revenues going forward due to encouraging deal wins from
clients coupled with a positive outlook towards discretionary spends, the company said.
International billing contributed 93 percent of the total customer revenues of the segment.
Profit from the segment fell 7 percent on the year to Rs 1833.8 crore. The EBITDA margin for the segment fell to 18.7 percent for the quarter as compared to 20.7 percent in the corresponding quarter of the previous year.
"The segment margin was impacted mainly due to higher employee costs and forex loss," L&T said.
OUTLOOK
Going forward, L&T expects public capital expenditure to continue to drive capital expenditure on infrastructure in India.
"The government is expected to maintain its strong commitment to infrastructure investments, recognising it as a key driver of broader economic growth," the company said.
L&T added that the global economy remains volatile as policy changes by the USA could result in another bout of tariff war. However, the company said that ceasefire between Hamas and Isarel should improve the situation in the GCC region.
The conglomerate expects West Asian countries particularly Saudi Arabia to continue to pursue their ambitious growth plans in both energy and other sectors.
It added that European economies continue to move sideways while questions over the Chinese economy further cloud the growth picture and push the global economies towards fragmentation and localization.
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