Larsen & Toubro (L&T) has reported its best ever quarterly order inflow in Q2 at ₹89,153 crore. The company expressed positivity, stating that the prospect pipeline for the next 6-12 months looks encouraging.
In terms of financial performance, L&T’s second-quarter net profit increased by 45% to ₹3,223 crore compared to the same quarter last year. Meanwhile, its revenue from operations saw a growth of 19% to ₹51,024 crore in Q2 FY24, as compared to ₹42,763 crore in Q2 FY23.
The construction major saw a 72% YoY growth in its quarterly order inflow, across various segments. S N Subrahmanyan, CMD of L&T, highlighted the achievement, stating, “During the quarter, we have received the highest ever order inflows in the history of the company. The company now tops the list of international EPC contractors working in the MENA region in terms of project value under execution.”
R Shankar Raman, CFO of L&T, also expressed optimism for the future. He mentioned that the prospect pipeline for the next 6-12 months is encouraging and it is likely that they will outperform the order inflow and revenue guidance for FY24, depending on the H1 performance.
At the beginning of the financial year, L&T had set a guidance of 10-12% growth in order intake for FY24, with a projected revenue growth of 12-15%. The company’s consolidated order book stands at ₹4.5 lakh crore as of September 30, 2023, with international orders accounting for 35% of the total.
The majority of the second quarter’s order inflows came from the Middle East, specifically Saudi Arabia. Two-thirds of the Q2 order wins originated from international markets, with 80% of international orders coming from the Middle East.
Despite the ongoing conflict between Israel and Hamas, L&T does not anticipate significant disruptions or derailing of project progress. Raman stated, “We have just turned a corner in the supply chain constraints seen during Covid and are getting back to normalcy. While we cannot completely eliminate the risk, it is not causing us significant concern.”
Regarding margins, L&T’s earnings before interest tax depreciation and amortization (EBITDA) grew by 15% for the quarter. However, the company experienced a decline in its EBIDTA margins from 11.4% to 11% on a YoY basis. In the infrastructure segment, the EBIDTA margin dropped by 1.1% YoY to 5.4% in Q2. This margin squeeze is attributed to the increase in input costs for pre-Covid legacy contracts.
Raman reassured that the margins for the infrastructure segment will normalize in the subsequent quarters as these projects near completion.
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