Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q4 FY19 Earnings Presentation
48 slides from Larsen & Toubro's earnings presentation, May 11, 2019
Slide 1: Cover letter to stock exchanges
Larsen & Toubro Limited Q LARSEN & TOUBRO Secretarial Department L&T House, Ballard Estate Narottam Morarjee Marg Mumbai - 400 001, INDIA Tel: +91 22 6752 5656 Fax: +91 22 6752 5893 www.Larsentoubro.corn SEC/PAM/2019 May 11, 2019 The Secretary National Stock Exchange Of India Limited BSE Limited Exc
Slide 2: Investor Presentation Q4 FY19
1 Investor Q4 FY19 Presentation May 10, 2019
Slide 3: Disclaimer
2 Disclaimer This presentation contains certain forward retain highly skilled professionals, time and looking statements concerning L&T’s future cost over runs on contracts, our ability to business prospects and business profitability, manage our international operations, which are subject to a numb
Slide 4: Presentation Outline
3 Presentation Outline 01 L&T Overview 02 Business Overview 03 Group Performance 04 The Environment & the Outlook
Slide 5: L&T – At a Glance
4 L&T – At a Glance India’s largest E&C company with interests in Projects, Infrastructure Development, Manufacturing, IT & Financial Services ` FY 19 Group Market Cap Credit Ratings Professionally Revenues: ₹ 1410 Bn (10th May, 2019): CRISIL: AAA / Stable Managed Company (approx.US$ 20 Bn) ₹ 1901 B
Slide 6: L&T – At a Glance
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Slide 7: L&T – Shareholding Pattern
6 L&T – Shareholding Pattern Bharat ETF, Others, 0.6% 7% Govt. Mutual Financial Institutions Major Institutional Shareholders % Shares Funds & Pvt. Insurance & Insurance Life Insurance Corporation of India 17.6% Cos., Companies, 16% 23% HDFC Mutual Fund 3.9% 31st March, ICICI Prudential Life Insuran
Slide 8: Experienced Management Team
7 Experienced Management Team A M Naik S. N. Subrahmanyan Group Chairman Chief Executive Officer and Managing Director • BE [Mech] • B.SC ENGG (CIVIL), MBA (Finance) • Joined L&T in March 1965 • Joined L&T in November 1984 • Diverse and vast experience in general • Vast experience in Design & Build
Slide 9: Corporate Governance
8 Corporate Governance L&T’s essential character revolves around values based on transparency, integrity, professionalism and accountability. Board Four-tier Governance Structure of Directors Executive Committee (ECom) Independent Company (IC) Board Strategic Business Group (SBG) / Business Unit (BU
Slide 10: Sustainability & Integrated Report
9 Sustainability & Integrated Report Integrated Report <IR>: Released L&T’s first IR 2017-18 • Based on International Integrated Reporting Council (IIRC) framework • In alignment with Global Reporting Initiative (GRI) Standards ‘In Accordance – Comprehensive option’ – highest level of disclosure in
Slide 11: Sustainability – Environment & Social
10 Sustainability – Environment & Social Green Product Portfolio – INR 221. 25 Billion CSR Highlights – 2.1 million beneficiaries • Water infrastructure catering to 30 million people • Theme: Building India’s Social Infrastructure • Secured cumulatively 650 MWp + Grid connected solar PV projects acr
Slide 12: Presentation Outline
11 Presentation Outline 01 L&T Overview 02 Business Overview 03 Group Performance 04 The Environment & the Outlook
Slide 13: Builders to the Nation
12 Builders to the Nation Statue of Unity, Gujarat Turbine Rotor, Gujarat 88m Rail Bridge Jammu Udhampur Wankhede Stadium, Mumbai Baha’i Temple, Delhi Mumbai International Airport Medigadda Barrage, Telangana Vivekanand Bridge, Kolkata Kakrapar Nuclear Power Plant, Guj Vizag Steel Plant Sri Sathya S
Slide 14: International Footprint – Marquee Jobs
13 International Footprint – Marquee Jobs Stadium at Barbados Salalah Airport, Oman Twin Towers, Dubai Marina NMC Speciality hospital, Abu Dhabi Bhukara Hotel, Uzbeckistan World’s Longest Conveyer, Bangladesh Bulk Cement Terminal, Colombo Fabrication Facility, Oman Punatsangchhu HEP, Bhutan Sheikh K
Slide 15: E&C Delivery Platform
14 E&C Delivery Platform One of Asia’s largest vertically integrated E&C Companies Design & Engineering EPC Projects Manufacture & Construction Fabrication Single point responsibility for turnkey solutions
Slide 16: Quality Customer Mix
15 Quality Customer Mix Indian Coastguard
Slide 17: Multiple Alliances & Joint Ventures
16 Multiple Alliances & Joint Ventures Alliances Joint Ventures Pre Qualifications Befula Investments Note: Some of these are project specific alliances & pre qualifications
Slide 18: L&T’s Business Structure
17 L&T’s Business Structure LARSEN & TOUBRO LTD. BUSINESS VERTICALS SUBSIDIARIES, JVs & ASSOCIATES BUILDINGS & FACTORIES L&T HYDROCARBON ENGINEERING TRANSPORTATION INFRASTRUCTURE FINANCIAL SERVICES HEAVY CIVIL INFRASTRUCTURE IT & TECHNOLOGY SERVICES WATER & EFFLUENT TREATMENT INFRASTRUCTURE SPVs (BO
Slide 19: Presentation Outline
18 Presentation Outline 01 L&T Overview 02 Business Overview 03 Group Performance 04 The Environment & the Outlook
Slide 20: Performance Highlights – FY19
19 Performance Highlights – FY19 +21% +20% +18% +12% +16%
Slide 21: Key Financial Indicators
20 Key Financial Indicators Amount in Rs bn Q4 FY18 Q4 FY19 % Var Particulars FY18 FY19 % Var 496 565 14% Order Inflow 1529 1768 16% Order Book 2631 2934 12% 407 449 10% Revenue 1199 1410 18% 54 56 3% EBITDA 136 163 20% 32 34 8% PAT 74 89 21% Net Working Capital 20% 18% -200bps RONW (%) 14.1 15.3 +1
Slide 22: Q4 / FY19 Order Inflow / Order Book
21 Q4 / FY19 Order Inflow / Order Book Amount in Rs bn Order Inflow 16% 1768 1529 • Strong all round growth in 14% 468 inflows 359 • Growth in International 1300 business largely contributed 1170 by Hydrocarbon in Q4 • Pickup witnessed in FY18 FY19 domestic private sector Dom Intl • Domestic public
Slide 23: Group Performance – Sales & Costs
22 Group Performance – Sales & Costs Q4 Q4 % % Rs Billion FY18 FY19 FY18 FY19 Var Var • Revenue growth 407 449 10% Revenue 1,199 1,410 18% primarily led by Infra, Hydrocarbon, Realty 29% 30% 1% International Rev. 33% 32% -1% and Services businesses 270 311 15% MCO Exp. 773 919 19% • Rise in staff co
Slide 24: Group Performance – EBITDA to PAT
23 Group Performance – EBITDA to PAT Q4 Q4 % % FY18 FY19 Var Rs Billion FY18 FY19 Var • Heavy Engg, Defence, Hydrocarbon and Services 54 56 3% EBITDA 136 163 20% businesses boost EBITDA (4) (5) 21% Fin. Cost (15) (18) 17% Margins (5) (5) -4% Depreciation (19) (21) 8% • Other income mainly comprises
Slide 25: Segment Performance Analysis
24 Segment Performance Analysis
Slide 26: Segment Composition
25 Segment Composition Heavy Electrical & Defence Infrastructure Power Engineering Automation Engineering Buildings & Factories (B&F) Process Plant Electrical Standard EPC- Coal & Gas Equipment Products Defence Transportation Infra (TI) Heavy Civil infra (HC) Thermal Power Plant Electrical Systems C
Slide 27: FY19 Order Inflow Composition
26 FY19 Order Inflow Composition Defence Engg. Hydrocarbon E&A 15.8% 1.7% 3.4% HE 2.3% Power Services 1.7% 18.1% Others 2.9% Order Inflow Middle East Rs 1768 Bn 8.7% Infrastructure 54.1% USA & Europe 8.2% ROW 9.6% Domestic 73.5%
Slide 28: FY19 Order Book Composition
27 FY19 Order Book Composition Power 2.4% HE 1.6% Defence Engg. 3.9% E&A 0.9% Hydrocarbon 13.6% Order Book Others Rs 2934 Bn 2.0% Middle East Infrastructure 11.6% 75.6% USA & Europe 0.9% ROW 9.1% Domestic 78.4%
Slide 29: FY19 Revenue Composition
28 FY19 Revenue Composition E&A 4.1% Hydrocarbon Defence Engg. 10.7% Services 2.7% 22.8% HE 1.5% Revenue Power Rs 1410 Bn 2.8% Others 4.0% Middle East 17.3% USA & Europe Infrastructure 9.1% 51.4% ROW 5.6% Domestic 68.0%
Slide 30: Infrastructure Segment
29 Infrastructure Segment Amount in Rs bn 12% Net Revenue • Composition of Order Q4 Inflows shifted towards larger sized projects in FY19 • Strong revenue growth on 13.5% EBITDA Margin 12.3% robust order book conversion across business verticals • Margins reflect stage of 16% execution, job mix and
Slide 31: Power Segment
30 Power Segment Amount in Rs bn 38% • Limited EPC opportunities Net Revenue and aggressive continues to Q4 impact business performance • Retrofitting of old plants with emission control equipment (FGD & SCR) provides new 4.2% EBITDA Margin 4.7% business opportunity • Revenue decline reflects reduce
Slide 32: Heavy Engineering Segment
31 Heavy Engineering Segment Amount in Rs bn 58% Net Revenue Q4 • Revenue growth predominantly driven by orders from Oil & Gas sector • International markets showing 19.8% EBITDA Margin 22.8% strong traction in Refineries space; has driven growth in Inflows (78%) & Order Book (61%) in FY19 57% • Glo
Slide 33: Defence Engineering Segment
32 Defence Engineering Segment Amount in Rs bn 15% Net Revenue Q4 • Ordering delays restricts the potential of the segment 13.3% EBITDA Margin 18.6% • Execution of tracked artillery gun order contributing to revenue growth 17% • Margins reflect stage of Net Revenue execution, job mix and FY operatio
Slide 34: Electrical & Automation Segment
33 Electrical & Automation Segment Amount in Rs bn 5% Net Revenue Q4 • Revenue growth driven by Product businesses (ESP & MPS) across Industrials, Buildings, Agriculture and 19.7% EBITDA Margin 20.6% Rural Electrification sub- sectors • Margins enhanced by 13% operational efficiencies & profitable s
Slide 35: Hydrocarbon Segment
34 Hydrocarbon Segment Amount in Rs bn 22% • Significant growth in Order Net Revenue Q4 Inflows (76%) & Order Book (49%) contributed by domestic & International wins • Strong revenue growth on the 5.9% EBITDA Margin 9.8% back of higher Order Book • Stable Oil prices leading to build up of healthy pr
Slide 36: Developmental Projects Segment
35 Developmental Projects Segment Amount in Rs bn -11% • Segment includes Power Development business, Net Revenue Q4 Hyderabad Metro and Kattupalli Port (until divestment in Q1FY19) • Revenue largely contributed by Power Development Business -14.4% EBITDA Margin -3.6% • Hyderabad Metro: Partial CoD
Slide 37: IT & Technology Services Segment
36 IT & Technology Services Segment Amount in Rs bn 23% Net Revenue • Noteworthy growth by LTI & Q4 LTTS continues in FY19 • LTI revenue growth led by BFS, CPG, Retail & Pharma and High-Tech, Media & 21.0% EBITDA Margin 21.9% Entertainment verticals • LTTS revenue growth led by Transportation, Telec
Slide 38: Others Segment
37 Others Segment Amount in Rs bn 18% Net Revenue Q4 • Segment comprises Industrial Products & Machinery (IPM) and Realty business; 44.1% EBITDA Margin 13.9% PY includes Welding Products Business • Revenue growth & Margin largely contributed by Realty 35% business Net Revenue FY 30.6% EBITDA Margin
Slide 39: L&T Finance Holdings Group
38 L&T Finance Holdings Group Q4 FY18 Q4 FY19 % Var Rs Bn FY18 FY19 % Var 27.4 33.0 21% Income from Operations 102.1 129.9 27% 2.1 3.2 56% PAT * 8.0 14.5 81% Mutual Fund Average AUM 659.3 709.4 8% Net Loan Book 853.5 991.2 16% Gross Stage 3 Assets 8.7% 5.9% -280bps Net Stage 3 Assets 3.3% 2.4% -90 b
Slide 40: Presentation Outline
39 Presentation Outline 01 L&T Overview 02 Business Overview 03 Group Performance 04 The Environment & the Outlook
Slide 41: The Environment & the Outlook
40 The Environment & the Outlook Govt. Policy Macro Drivers PSU Capex Rural Infra Development Financialization of Savings State Govt. Spends Land Acquisition Curr. Account Deficit Liquidity Farm Loan Waivers IBC Consumption trends Inflation ROW Central Govt. Spends Tax Revenues Commodity Prices Bank
Slide 42: Thank You
41 Thank You Turn overleaf for Annexures
Slide 43: Group Profit & Loss Extracts
42 Group Profit & Loss Extracts L&T & L&T Group Fin. Devl. Rs Billion IT & TS Others (Incl. Services Projects FY19 FY18 % Var Eliminations) Income from Operations* 143.7 126.4 50.7 1,089.3 1,410.1 1,198.6 18% EBITDA 30.7 27.5 5.3 99.7 163.2 136.4 20% Other Income 2.6 3.5 (0.1) 12.5 18.5 13.4 38% Int
Slide 44: Balance Sheet
43 Balance Sheet Incr / Rs Billion Mar-19 Mar-18 (Decr) Equity & Reserves 624 549 75 Non Controlling Interest 68 52 16 Borrowings - Financial Services 915 752 163 Development Projects 191 178 14 Others 149 145 4 Sources of Funds 1,948 1,676 271 Fixed Assets 134 128 6 Intangible Assets & Investment P
Slide 45: Cash Flow
44 Cash Flow Q4 FY19 Q4 FY18 Rs Billion FY19 FY18 58.4 49.0 Operating Profit 164.1 132.5 15.3 18.3 Changes in Working Capital (27.0) (42.3) (11.9) (9.1) Direct Taxes paid (45.8) (34.0) 61.8 58.2 Net Cash from Operations (A) 91.3 56.2 (10.7) (1.0) Net Investment in Fixed Assets (incl. Intangible) (34
Slide 46: Share in Profit/(Loss) of JVs/Associates
45 Share in Profit/(Loss) of JVs/Associates Q4 FY18 Q4 FY19 Rs Bn FY18 FY19 0.43 0.55 MHPS JVs 1.54 1.68 (1.35) (1.98) IDPL & Subs. (4.14) (0.90) (0.44) (0.32) Special Steels and Heavy Forgings (2.23) (1.40) 0.19 0.47 Others 0.46 0.41 (1.17) (1.27) Total (4.36) (0.21)
Slide 47: Concessions Business Portfolio – 14 SPVs
46 Concessions Business Portfolio – 14 SPVs Transmission Lines: Portfolio: 1 project (482 Km) - Operational Roads and Bridges: Project Cost: Rs 15 bn Portfolio: 10 projects (1048 Km) 10 Operational Project Cost: Rs 108 bn Balance Equity Commitment (Mar 2019): Rs 9Bn Equity Invested at SPV level (Mar
Slide 48: Major Opportunities
47 Major Opportunities Roads & Highways Railways Water - National & State Highways - Metro Railways - Water transmission & distribution - Expressways - High speed Rail - Lift Irrigation schemes - Special Bridges - Track laying / track modernization - Water Treatment (Incl. Desal) - Tunnels for conve