Larsen & Toubro Q2 Results: Profit Up 7%, Beats Estimates

Larsen & Toubro Ltd.'s consolidated net profit rose 7% in the second quarter of the current financial year, beating analysts' estimates.

India's largest engineering, procurement and construction company posted a profit of Rs 4,113 crore in the July–September period, according to an exchange filing on Wednesday. Analysts tracked by Bloomberg had a consensus estimate of Rs 3,205 crore.

The company witnessed an accelerated growth in the projects and manufacturing segment during the quarter, where international revenue contributed 52% to the total segment revenue of Rs 32,057 crore.

L&T Q2 FY25 Earnings Highlights (Consolidated, YoY)

• Revenue from operations rose 21% to Rs 61,555 crore versus Rs 51,024 crore (Bloomberg estimate: Rs 57,621.5 crore).

• Operating profit or Ebitda rose 13% to Rs 6,362 crore versus Rs 5,632 crore (Estimate: Rs 6,141 crore).

• Ebitda margin contracted to 10.3% versus 11% (Estimate: 10.7%).

• Net profit up 6.69% to Rs 4,113 crore versus Rs 3,855 crore (Estimate: Rs 3,205 crore).

Order Book, Inflow

The consolidated order book of the group as on Sept. 30 grew 7% year-on-year to Rs 5.1 lakh crore with international orders constituting 40%. It is for the first time the order book has crossed the Rs 5-lakh-crore mark, the company said.

Order inflow fell 10% to Rs 80,045 crore on account of moderation in domestic orders due to the model code of conduct during the elections, the company said.

"The drop in order inflow in the July–September quarter was due to moderation in orders from the domestic market," R Shankar Raman, chief financial officer of L&T, told reporters on a conference call.

However, he is confident that the order pipeline prospects would be healthy. "Between now and March 2025, the order pipeline looks healthy and we expect the mix between domestic and international orders to be equal at the end of the financial year."

International orders comprised 63% of the total order inflow at Rs 50,083 crore in the September quarter.

"The key enablers for the growth in second half of FY25 would be sustenance of investment momentum, favourable geopolitical conditions, and military de-escalation in both Europe and Asia," Raman added.

The company has received orders across different segments like renewables, transmission and distribution, roads and airport runways, urban transit, nuclear power, hydel and tunnel, minerals and metals, factories, precision engineering and the offshore vertical of hydrocarbon business.

Segment Performance

Infrastructure

L&T has carved out a separate renewable energy vertical from power transmission and distribution business within the infrastructure segment to focus and capitalise on the global growth opportunities in the renewable energy segment, the company said.

The segment order inflow grew 77% in the second quarter to Rs 49,522 crore, led by orders from the transmission and distribution and renewable energy businesses. International orders constituted 63% of the total order inflow of the segment during the quarter.

As of Sept. 30, the segment order book stood at Rs 3.43 lakh crore, with international orders constituting 32%.

Energy

The second largest segment for the group secured Rs 7,759 crore worth of orders in the July–September quarter. However, this was 80% lower as compared to same quarter last year on account of two ultra-mega orders in the hydrocarbon segment in the Middle East, according to Raman.

As of Sept. 30, the energy project segment order book stood at Rs 1.17 lakh crore where international order book was 77%.

The segment revenue in the second quarter rose 31% to Rs 8,873 crore, mainly on strong execution. International revenues constituted 69% of the total customer revenues of the segment during the quarter. The Ebitda margin of the segment was 8.8%.

Development Projects

This segment constitutes of Nabha Power Project and Hyderabad Metro. Although the segment revenue declined in the second quarter, the company is hopeful of turning around the Hyderabad Metro by monetising around 18.5 million sq ft of real estate property around the stations.

The company has got government approval to bring-in third party investors to develop the properties that would lighten the balance sheet of Hyderabad Metro. The monetised investments will be utilised to reduce the debt and make the metro financially viable, Raman said.

Shares of L&T closed 0.77% higher at Rs 3,407.1 apiece on the BSE, compared to a 0.53% decline in the benchmark Sensex.