Larsen & Toubro posted a 45 per cent rise in consolidated net profit and 19 per cent rise in revenue in the second quarter of FY24, aided by project executions and profit from sale of commercial property in Hyderabad Metro.

At a consolidated level, the company reported a net profit of ₹3,223 crore on revenue of ₹51,024 crore. This includes the results of its IT, software services and financial services subsidiaries. The numbers were far in excess of street estimates.

The pace of order inflows, the pipeline over the next 6-12 months, especially from the international markets, as well as the performance in the first half was encouraging enough to expect the company to exceed its revenue and order inflows guidance for the year, Chief Financial officer, R Shankar Raman, said in a media interaction. He, however, declined to give specific numbers on it. The company had guided for 12-15 per cent growth in revenue for FY24 and 10-12 per cent growth in order intake.

The quarter under review saw order inflows rise 72 per cent to ₹89,153 crore, ending the half year with a total order book size of ₹4.5-lakh crore, of which international orders had a share of 35 per cent.

Israel-Hamas conflict

About two-thirds of the order inflows were from international markets, primarily West Asia. International revenue accounted for 43 per cent of total revenue.

Commenting on the Israel-Hamas conflict and the possible impact on the company’s operations, Shankar Raman said that most of its orders in the West Asian region were from Saudi Arabia, which had so far stayed away from the conflict. He added that the projects in Saudi Arabia were unlikely to get delayed. Media reports had said last month that it won a $4-billion order from Saudi Aramco for phase-2 expansion of its Jafurah unconventional gas production project.

“In all these things we can never be sure, and we have to watch developments,” he said, adding that currently there was no adverse impact.

Segment-wise

The infrastructure segment, the largest segment, saw a 27 per cent rise in revenue at ₹24,613 crore and had order inflows of ₹27,990 crore, up 12 per cent year on year. International orders accounted for a fourth of the total.

The EBITDA margin of the segment shrank to 5.4 per cent from 6.6 per cent a year ago, primarily due to legacy projects, taken on at a time when raw material costs were high. Shankar Raman said that future quarters will see an improvement in margins as the legacy projects were completed.

In the energy projects segment, the company saw brisk order inflows of ₹40,141 crore, with the total order book size crossing the ₹1-lakh crore mark for the first time. Here, international orders accounted for 79 per cent of the total.

Revenue in this segment rose over a fifth to ₹6,788 crore due to a pick-up in execution momentum of a few international projects in the hydrocarbon business.

The EBITDA margin here was 100 basis points higher at 9.5 per cent from a year ago, mainly on account of execution cost savings in certain projects in Hydrocarbon and a favourable mix of job progress in Power projects.

The hi-tech manufacturing segment, comprising the defence engineering business, saw order inflows rise 35 per cent to ₹2,395 crore, taking the order book to ₹25,958 crore.

Shankar Raman pointed out that the successful completion of the company’s first-ever share buyback had boosted the return on equity to 15.3 per cent.

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