Larsen & Toubro Q2 Results: Profit Rises 37% Beating Estimates On Strong Project Execution

Larsen and Toubro Ltd.'s profit rose in the second quarter, surpassing analysts' estimates, led by strong execution and accelerated progress in the projects and manufacturing portfolio.

Net profit for the engineering and construction conglomerate rose 36.8% on year to Rs 3,856 crore in the quarter ended September, according to an exchange filing on Tuesday. That compares with the Rs 2,725.4-crore consensus estimate from analysts tracked by Bloomberg.

L&T Q2 FY24 Earnings Highlights (Consolidated, YoY)

• Revenue from operations rose 19.3% to Rs 51,024 crore (Bloomberg estimate: Rs 50,670 crore).

• Ebitda up 15.1% to Rs 5,632 crore (Bloomberg estimate: Rs 5,449.8 crore).

• Ebitda margin at 11% (Bloomberg estimate: 10.8%).

The quarterly order inflow stood at a record Rs 89,153 crore, growing 72%, across diverse segments like onshore verticals of the hydrocarbon business, urban transit systems, transmission and distribution as well as residential and commercial space.

International orders at Rs 59,687 crore comprised 67% of the total order inflow. International revenue during the quarter at Rs 21,898 crore constituted 43% of the total revenue, it said.

The company has kept its full-year guidance intact for order inflow and revenue at 10–12% and 12–15%, respectively.

"We have outperformed the order inflow and revenue guidance for the half year, and we will outperform the guidance for the full year as well given the order inflow from international markets and the economic progress in the domestic market," R Shankar Raman, group chief financial officer of L&T, told reporters in a media call. "However, I would not like to put a number to it."

The company said the war in the Middle East is an "unfortunate" development, but most of its orders are in Saudi Arabia and they have till now steered away from any conflicting situation.

"Given the quality of the programmes Saudi Arabia and ME countries have unleashed, and where we have participated, it is unlikely the Israel-Hamas conflict will derail these projects," Raman said. "However, we are keeping our ears to the ground and monitoring the situation."

In the domestic market, there can be event risks in terms of elections early next year. Code of conduct can cause potential disruptions, according to Raman. "However, some of the deferments that we have seen may get unlocked in the next three to four months."

Overall Order Book

On a cumulative basis, the order inflow for the first half of the fiscal rose 65% to Rs 1.55 lakh crore. International orders at Rs 87,333 crore in the first half constituted 56% of the total order inflow.

The consolidated order book as of Sept. 30 stood at Rs 4.5 lakh crore, with international orders constituting 35%.

"During the quarter, we have received the highest-ever order inflows in the history of the company," SN Subrahmanyan, managing director of L&T, said. "The company now tops the list of international EPC contractors working in the MENA region in terms of value for projects under execution."

L&T completed the first-ever buyback of equity shares during the quarter, in alignment with its long-term Lakshya 2026 plan to enhance shareholder value.

The company remains cautiously optimistic in the near-term, considering the recent geopolitical developments. However, it expects sustained buoyancy of services and the Union government's thrust on capex to continue.

Shares of Larsen & Toubro closed 0.09% higher at Rs 2,928.80 apiece on the BSE before the announcement as compared with a 0.37% fall in the benchmark Sensex.