Larsen and Toubro (L&T) is set to present its earnings report for the first fiscal quarter of FY25 on July 24. The multinational engaged in EPC projects, Hi-tech manufacturing and services is expected to deliver positive results on a year-on-year (YoY) basis, primarily due to sales growth, robust wins in construction, power T&D and Hydrocarbons.
According to a Moneycontrol poll, L&T's net profit is expected to jump 15 percent YoY to Rs 2,876 crore from Rs 2,493 crore in the corresponding quarter of FY24. Revenue is seen rising 9.6 percent YoY to Rs 52,518 crore, up from Rs 47,882 crore reported in the year-ago period.
The most optimistic estimate sees L&T's net profit rising 28 percent year-on-year. But the most pessimistic projection suggests that net profit might only rise six percent YoY.
On a sequential basis, however, L&T's net profit and revenue are seen falling 33 percent, and 21 percent, respectively.
What factors are driving the earnings?
Robust Order Book and Execution: L&T's strong order book and efficient project execution are expected to be major contributors to revenue growth, driving higher earnings.
Infrastructure and Construction Projects: Increased investment in infrastructure and construction projects has bolstered L&T's revenue streams, leading to improved profitability. Motilal Oswal expects consolidated revenue growth of 12 percent YoY, led by 14 percent YoY Core E&C revenue growth.
Order Inflow: Larsen & Toubro (L&T) is well placed to achieve its ‘Lakshya 2026’ revenue of Rs 2.7 lakh crore and order inflow of Rs 3.7 lakh crore, translating into a revenue and order inflow CAGR of 14 percent, according to Incred Equities.
Margins: L&T is expected to report on-year sales growth of 13 percent. With robust order inflow growth, execution completion of legacy projects, refinancing of Hyderabad metro etc, margins may see ramping up but at a slower pace as legacy orders get executed.
Capex: While govt. capex/initiatives and ME hydrocarbon ordering show strong momentum, but private capex is yet to show its best. FY26 strategic plan is to focus on making subsidiaries self-sustainable, a strong presence in green energy (hydrogen, battery storage etc.) and non-core exits, noted Nuvama.
What to look out for in the quarterly show?
Domestic Tender Pipeline and Ordering: Insights into the volume and value of new orders secured or anticipated for future revenue growth.
Margin Performance and Cost Management: Details on operational efficiencies, cost-saving measures, and margin stability or improvement.
Working Capital Cycle: Evaluation of financial health through management of receivables, payables, and inventory for smooth cash flow and funding.
Execution Ramp-Up in Saudi Projects: Updates on project timelines, milestones achieved, and challenges in the Middle East market.
Middle East Capex and Pipeline: Information on upcoming projects and investment plans in the region for growth strategy insights.
Guidance for FY25: Any updates or changes in guidance, impacting investor sentiment and future performance expectations.
Labour Shortage Comments: Addressing recent labour shortages and their potential impact on project execution and timelines.
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