L&T Q3 Results: Net Profit Beats Estimates On Higher Sales, Operating Profit

The infrastructure, IT, and ITES businesses contributed to L&T's Q3 earnings.

<div class="paragraphs"><p>A Larsen &amp; Toubro Ltd. employee prepares a dome for grinding at the company’s heavy engineering division. (Source: Company website)</p></div>
A Larsen & Toubro Ltd. employee prepares a dome for grinding at the company’s heavy engineering division. (Source: Company website)

Larsen & Toubro Ltd.’s third-quarter profit rose on better project execution across segments, beating analysts' estimates.

Net profit of India’s largest engineering-to-construction company surged 23% year-on-year to Rs 3,065.9 crore in the three months ended December, according to an exchange filing. This compares to the Rs 2,570 crore consensus estimate of analysts tracked by Bloomberg.

The earnings were largely driven by strong performance across segments, primarily led by infrastructure, IT, and ITeS segments.

L&T Q3 FY23 Highlights (YoY)

  • Revenue from operations rose 17% to Rs 46,390 crore, compared with an estimate of Rs 45,850.5 crore.

  • Operating profit rose 12% to Rs 5,073.04 crore, against the Rs 4,467.7 crore forecast.

  • Operating margin came in at 11%, against 11.5% a year earlier.

International revenues during the December quarter stood at Rs 17,317 crore, contributing 37% of the total revenue.

Total orders secured at the group level during the period were Rs 60,710 crore, a growth of 21% year-on-year.

Orders were received from oil and gas, public spaces, hydel and tunnels, irrigation systems, ferrous metals, and power transmission and distribution segments.

International orders of Rs 15,294 crore during the quarter comprised 25% of the total order inflow.

As on Dec. 31, the consolidated order book of the group stood at a record Rs 3.86 lakh crore.

The company is expected to meet its full-year guidance for revenue and order Inflow given at the beginning of the year on the back of order inflow trend over the last nine months.

"If the present and the last three quarters order award trend continues, we not only expect to meet but exceed our revenue and order inflow guidance for FY23," R Shankar Raman, group chief financial officer at L&T, said in a conference call.

For L&T to meet its guidance of 30% growth, it requires orders worth Rs 2 lakh crore. For that, the company requires to bid for Rs 10 lakh crore worth of tenders, Raman said.

According to Raman, the Union budget on Feb. 1 is the gate that allows people to pause and analyse if there is any change in customs, duties or tax structure that needs to be factored in.

"So, February is the lean month, but if the trend continues in March, then we are confident of beating our guidance. However, we cannot predict the quantum by which we will exceed the guidance," he said.

Segment-Wise Performance

Infrastructure Projects

The order inflows for the infrastructure segment grew 28% YoY to Rs 32,530 crore in Q3 FY23. International orders at Rs 2,936 crore constituted 9% of the segment order inflows. The segment order book stood at Rs 2.79 lakh crore, out of which international orders were 22%.

The Ebitda margin of the segment for the third quarter was at 7%, as compared with 7.1% recorded in the same quarter last year. Margin for the quarter remained stable amid continuing cost pressures, the company said.

IT & Technology Services

During the quarter, L&T Infotech Ltd. and Mindtree Ltd. successfully completed their merger and started operating as a merged entity—LTIMindtree Ltd.

The segment's customer revenues for the quarter grew 25% YoY to Rs 10,517 crore on strong demand for tech-enabled services.

International billing contributed 93% of the total customer revenues of the segment. The aggregate revenue of the two listed subsidiaries—LTIMindtree and L&T Technology Services—of $1.3 billion was up marginally by 2% sequentially.

The Ebitda margin for the segment dropped to 19.2% from 23.6% in the same quarter last year, due to one-time merger integration expenses in LTIMindree.

Financial Services

L&T Finance Holdings, the listed subsidiary, reported a 13% YoY growth in revenue from operations at Rs 3,349 crore in Q3 FY23.

The performance was led by higher disbursements in retail business as the subsidiary continues to focus on its strategy of higher retailisation of the loan book, it said.

The total loan book at Rs 88,426 crore grew by 3% YoY during the quarter. Retail loan book increased by 34% YoY, while the wholesale loan book shrunk by 24% in the last one year.

Development Projects

Customer revenues for the segment grew 13% YoY to Rs 1,106 crore in Q3 FY23 on the back of higher PLF in the Nabha Power Plant and increase in ridership in Hyderabad Metro.

The segment EBIT, however, recorded a loss of Rs 6 crore as compared to loss of Rs 48 crore in the same quarter last year on improved metro ridership.

During the quarter, the company entered into a share purchase agreement to sell its entire shareholding in L&T Infrastructure Development Projects Ltd.—a joint venture primarily engaged in the development and operation of toll road and power transmission assets.

Accordingly, the investment in the joint venture has been classified as “Held for Sale”, pending receipt of necessary approvals, the company said.


This segment comprises realty, industrial valves, smart world and communication businesses, construction equipment and mining machinery business, and rubber processing machinery businesses.

Customer revenues during the quarter grew by a marginal 1% YoY to Rs 1,468 crore due to lower pace of execution in the SWC business.

The segment Ebitda margin during the quarter grew to 19.6% compared with 14.7% in the same quarter last year on account of favourable sales mix in the construction equipment, mining machinery, rubber processing machinery business, and profit on sale of property in the realty business.


With softening demand conditions and elevated interest rates, it is expected that inflation will reduce in 2023. Despite several global headwinds, the global economy is not at a higher risk of sliding into a recession, the company said.

"We believe that oil prices are likely to remain firm at current levels, aiding the Gulf coalition countries to continue to earn surpluses and thereby, create sufficient financial flexibility to invest in sectors besides oil, industrial and green investments," Shankar Raman said.

The company possesses the necessary capability and flexibility to continuously rebalance its approach and strategy in order to benefit from the dynamic business environment, he said.

Shares of L&T closed 2.11% lower before the results were announced, compared to a 0.21% rise in the benchmark Sensex.