Larsen & Toubro (L&T) missed standalone revenues. Order inflow crosses Rs2 lakh crore mark for FY23 grew 19% on YoY basis. L&T received orders worth Rs 230,528 crore at the group level for FY23, with order book of 399526 crores. For Q4FY23 order inflows came at Rs 76099 crore, marginally up by 3% YoY.
Q4FY23 Earnings Summary
L&T’s adjusted Standalone revenues (Ex- E&A) for the quarter de-grew marginally by 1.9% YoY to Rs 36734.1 crore (vs. our estimate of Rs 41971.5 crore). For FY23 adjusted Standalone revenues came at Rs110501 crores which grew by 9.4%. On standalone basis, Infrastructure segment revenue de-grew by 3.4% to Rs 27585.6 crore on YoY basis. Energy segment revenue came at Rs 5986.25 crores marginally grew by 0.7% YoY basis. Hi-Tech manufacturing segment posted revenue of Rs 2320.7 crores strongly grew by 24.6% YoY basis with accelerated progress in few jobs. Others segment reported a de-growth of 1.8% YoY to Rs1308.61 crore
On a consolidated basis, adjusted revenues grew by 10% to Rs 58340 crore YoY basis aided by strong execution momentum in Hydrocarbon, Hi-Tech Manufacturing and IT&TS. On consolidated basis, IT & Technology services segment posted revenues of Rs 10645 crores grew by 21% YoY. Financial service segment revenue grew by 5% at Rs 3116 crores. While development project segment registered a growth in revenue by 12% YoY to Rs 1229 crores driven by a higher PLF in the Nabha Power plant and increase in ridership in Hyderabad Metro
For Q4FY23, L&T registered order inflows at group level worth Rs 76099 crore, which grew by 3% YoY. 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. International orders at Rs 36046 crore during the quarter comprised 47% of the total order inflow. Overall infrastructure segment secured orders worth Rs 41093.4 crore (~54% of total inflows). L&T’s order backlog as on Q4FY23 stood at Rs 399526 crore with international orders contributing 28%
During the quarter, Standalone EBITDA margins contracted by 74bps to 9.6% (Vs. our estimates of 10.4%) on YoY basis. On a consolidated basis, EBITDA margins came in at 11.7 vs 12.3% in Q4FY22
Consequently, for Q4FY23, standalone adjusted PAT (Ex-E&A) came in at Rs 3002.9 crore, grew by 3.5% on YoY (Vs. our estimates of Rs 3392.7 crore). Other income came in at Rs 1079.9 crore grew by 53.7% on YoY while, interest expense increased by 21.2% to Rs 534 crore. The consolidated Adj. PAT for Q4FY23 came in at Rs 3990 crore (Vs Rs 3620 crore in Q4FY22)
NWC / Revenue came at 16.1% in FY23 vs 19.7% in FY22 amid robust operational cash flows of Rs 18500 crore supported by smart execution. Net debt to Equity came at 0.62 in FY23 vs 0.81 in FY22
ICICIdirect Research view on Larsen & Toubro Ltd Stock
View: L&T remains the best way to play the capex recovery theme in India given its strong execution capability, presence across diverse sectors and geographies which makes its less vulnerable during down cycles. Focus on monetisation of non-core assets, enhancing ROE’s and reducing debt makes it an attractive portfolio bet to ride the infrastructure and manufacturing cycle revival theme.
Impact: Negative
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