Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q3 FY2019 Earnings Presentation
48 slides from Larsen & Toubro's earnings presentation, Jan 30, 2019
Slide 1: Exchange filing cover letter
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 January 30, 2019 The Secretary National Stock Exchange Of India Limited BSE Limited
Slide 2: Investor Presentation Q3/9m FY19
1 Investor Q3/9m FY19 Presentation January 25, 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 18 Group Market Cap Credit Ratings Professionally Revenues: ₹ 1200 Bn (28th January, 2019): CRISIL: AAA / Stable Managed Company (approx.US$ 18 Bn) ₹ 18
Slide 6: L&T – At a Glance: Market Cap
626'L 81,220 81,das 8es‘L 8L4ew 98S‘L L1,das TLbL LLAew 91,das 9L4ew GOEL G1,das 865‘L SL4ew EGE‘L vL,das ©) LARSEN & TOUBRO L&T - At a Glance L&T Market Cap (Amt. = Bn) v6E vb dew €L,das €b, ew ZL, 3das ZL, aeW bb, 3des bb, 4ew OL, 3das OL, 2eW 60, 3das 60, Jew 80, 3das 80, 4eW ZO, 3425 ZO, 4eW 90,
Slide 7: L&T – Shareholding Pattern
6 L&T – Shareholding Pattern Bharat ETF, Others, 0.4% 7% Govt. Mutual Financial Funds & Pvt. Institutions Major Institutional Shareholders % Shares Insurance & Insurance Life Insurance Corporation of India 18.3% Cos., Companies, 14% 25% HDFC Mutual Fund 3.8% L&T 31st Dec, ICICI Prudential Life Insur
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 Oil & Gas Equipment Vivekanand Bridge, Kolkata Kakrapar Nuclear Power Plant, Guj Vizag Steel Plant Sri Sathya Sai Whitef
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 – Q3 FY19
19 19 Performance Highlights – Q3 FY19 +37% +27% +24% +5% -12%
Slide 21: Performance Highlights – 9M FY19
20 20 Performance Highlights – 9M FY19 +31% +31% +22% +5% +16%
Slide 22: Key Financial Indicators
21 21 Key Financial Indicators Amount in Rs bn Q3 FY18 Q3 FY19 % Var Particulars 9M FY18 9M FY19 % Var 482 422 -12% Order Inflow 1034 1203 16% Order Book 2709 2840 5% Revenue from 287 357 24% Operations 790 961 22% (like-to-like) 31 40 27% EBITDA 82 107 31% 15 20 37% Reported PAT 42 55 31% Net Worki
Slide 23: Q3/9M FY19 Order Inflow / Order Book
22 22 Q3/9M FY19 Order Inflow / Order Book Amount in Rs bn Order Inflow 16% 1203 1034 • Order inflows witnessing less skew in FY19 compared to PY • Public sector continues to drive order inflows • Higher share of domestic Order Book order-book is outcome of 9M FY18 9M FY19 continued focus by public
Slide 24: Group Performance – Sales & Costs
23 23 Group Performance – Sales & Costs Q3 Q3 % 9M 9M % Rs Billion FY18 FY18 FY19 Var FY18 FY19 Var • Revenue growth 287 357 24% Revenue (like-to-like) 790 961 22% 1197 primarily contributed by Infra, Hydrocarbon, 35% 32% -3% International Rev. 35% 33% -2% 33% Realty and Services 183 235 28% MCO Exp
Slide 25: Group Performance – EBITDA to PAT
24 24 Group Performance – EBITDA to PAT Q3 Q3 % 9M 9M % Rs Billion FY18 FY18 FY19 Var FY18 FY19 Var • Strong performance by 31 40 27% EBITDA 82 107 31% 136 Services & Realty segment boosts EBITDA (4) (5) 48% Fin. Cost (11) (13) 16% (15) • Finance cost (5) (4) -1% Depreciation (14) (16) 12% (19) comm
Slide 26: Segment Performance Analysis
25 Segment Performance Analysis 25
Slide 27: Segment Composition
26 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 28: 9M FY19 Order Inflow Composition
27 27 9M FY19 Order Inflow Composition Defence Engg. Hydrocarbon E&A 1.5% 12.7% 3.8% HE 2.7% Services Power 20.0% 2.2% Others 3.3% Order Inflow Middle East Rs 1203 Bn 8.7% Infrastructure 53.8% USA & Europe 8.9% ROW 6.6% Domestic 75.8%
Slide 29: 9M FY19 Order Book Composition
28 28 9M FY19 Order Book Composition Power 2.9% HE 1.7% Defence Engg. 4.0% E&A Order Book 1.0% Rs 2840 Bn Hydrocarbon 11.2% Others 2.0% Middle East 13.0% Infrastructure USA & Europe 77.2% 0.8% ROW 7.1% Domestic 79.2%
Slide 30: 9M FY19 Revenue Composition
29 29 9M FY19 Revenue Composition E&A 4.3% Hydrocarbon Services Defence Engg. 11.2% 25.0% 2.8% Revenue HE 1.5% Rs 961 Bn Power Others Middle East 3.2% 4.6% 17.9% USA & Europe 9.9% Infrastructure 47.4% ROW 5.3% Domestic 66.9%
Slide 31: Infrastructure Segment
30 30 Infrastructure Segment Amount in Rs bn 24% Net Revenue • Strong revenue growth Q3 witnessed across business verticals • Robust conversion of Order Book into revenue due to 7.9% EBITDA Margin 5.4% efficient execution • Margins reflect stage of execution, job mix and cost 19% provisions arising
Slide 32: Power Segment
31 31 Power Segment Amount in Rs bn 29% • Limited opportunities and Net Revenue aggressive competition in the Q3 sector continues to impact business performance • Revenue decline reflects depleting order book 2.4% EBITDA Margin 2.9% • International jobs contributing to higher margins 35% • Profits o
Slide 33: Heavy Engineering Segment
32 32 Heavy Engineering Segment Amount in Rs bn 82% Net Revenue • Revenue growth predominantly Q3 driven by Orders from Oil & Gas and Nuclear sectors • International markets showing 28.4% EBITDA Margin 20.5% strong traction in Refineries space • Global competence, technology differentiation, proven
Slide 34: Defence Engineering Segment
33 33 Defence Engineering Segment Amount in Rs bn 36% Net Revenue Q3 • Execution of tracked artillery gun order contributing to revenue growth 7.4% EBITDA Margin 9.0% • Margin variation due to stage of execution and job mix 18% Net Revenue 9m 6.0% EBITDA Margin 15.2%
Slide 35: Electrical & Automation Segment
34 34 Electrical & Automation Segment Amount in Rs bn 20% Q3 Net Revenue • Revenue growth driven by Product businesses across Industrials, Buildings, 17.3% EBITDA Margin 17.4% Agriculture and Rural electrification sub-sectors • Margin growth led by operational efficiencies & 16% improved realisation
Slide 36: Hydrocarbon Segment
35 35 Hydrocarbon Segment Amount in Rs bn 22% Net Revenue • Composition of revenue Q3 trends in line with increasing India centricity of order wins • Middle-east prospect 8.0% EBITDA Margin 8.2% pipeline healthy • Higher Order Book and efficient execution leads to 32% strong revenue growth 9m Net Re
Slide 37: Developmental Projects Segment
36 36 Developmental Projects Segment Amount in Rs bn 16% • Segment includes Power Net Revenue Development business, Q3 Hyderabad Metro and Kattupalli Port (until divestment) • Higher PLF drives revenue in Nabha Power. 8.5% EBITDA Margin 4.2% • Drop in margins due to higher operating cost in Nabha 30
Slide 38: IT & Technology Services Segment
37 37 IT & Technology Services Segment Amount in Rs bn 29% Net Revenue • Strong growth by LTI & LTTS Q3 continues in 3Q • LTI Q3 revenue growth led by BFS, CPG, Retail & Pharma and High-Tech, Media & 21.3% EBITDA Margin 22.2% Entertainment verticals • LTTS Q3 revenue growth led by Transportation, Te
Slide 39: Others Segment
38 38 Others Segment Amount in Rs bn 77% Net Revenue Q3 • Segment comprises Industrial Products & Machinery (IPM) and Realty business; PY includes Welding Products 25.6% EBITDA Margin 47.2% Business • Revenue & Margin growth largely contributed by Realty business 66% Net Revenue • Steady revenue gro
Slide 40: L&T Finance Holdings Group
39 39 L&T Finance Holdings Group Q3 FY18 Q3 FY19 % Var Rs Bn 9M FY18 9M FY19 % Var 26.3 32.6 24% Income from Operations 73.4 94.6 29% 2.0 3.9 89% PAT * 6.0 11.3 89% Mutual Fund Average AUM 603.1 690.8 15% Net Loan Book 777.4 947.1 22% Gross Stage 3 Assets 10.4% 6.7% -366bps Net Stage 3 Assets 4.7% 2
Slide 41: Presentation Outline
40 Presentation Outline 01 L&T Overview 02 Business Overview 03 Group Performance 04 The Environment & the Outlook
Slide 42: The Environment & the Outlook
41 The Environment & the Outlook PSU Capex Inflation Central & State Govt. Spends MOAT Multilateral Funding Land Acquisition / ROW Budgetary Allocations Bharatmala / Infra Value Operational Consumption trends thrust Monetisation Excellence Global Protectionist Policies Client Payments & Robust Clear
Slide 43: Thank You
42 Thank You Turn overleaf for Annexures
Slide 44: Group Profit & Loss Extracts
43 43 Group Profit & Loss Extracts L&T & L&T Group Fin. Devl. Rs Billion IT & TS Others (Incl. Services Projects 9M FY19 9M FY18 % Var Eliminations) Income from Operations* 106.0 94.6 39.9 720.3 960.7 791.8 21% EBITDA 22.8 20.1 5.7 58.2 106.8 81.8 31% Other Income 2.3 3.3 (0.1) 7.3 12.8 9.8 30% Inte
Slide 45: Balance Sheet
44 44 Balance Sheet Incr / Rs Billion Dec-18 Mar-18 (Decr) Equity & Reserves 588 549 39 Non Controlling Interest 64 52 12 Borrowings - Financial Services 863 752 111 Development Projects 192 178 14 Others 226 145 81 Sources of Funds 1,933 1,676 257 Fixed Assets 128 128 0 Intangible Assets & Investme
Slide 46: Cash Flow
45 45 Cash Flow Q3 FY19 Q3 FY18 Rs Billion 9M FY19 9M FY18 35.3 31.3 Operating Profit 105.7 83.5 (3.2) (34.2) Changes in Working Capital (42.3) (78.6) (13.4) (8.1) Direct Taxes paid (33.9) (25.0) 18.6 (10.9) Net Cash from Operations (A) 29.5 (20.1) (10.3) (5.2) Net Investment in Fixed Assets (incl.
Slide 47: Share in Profit/(Loss) of JVs/Associates
46 46 Share in Profit/(Loss) of JVs/Associates Q3 FY18 Q3 FY19 Rs Bn 9M FY18 9M FY19 0.35 0.32 MHPS JVs 1.11 1.13 (1.45) (0.59) IDPL & Subs. (2.79) 1.08 (0.78) (0.37) Special Steels and Heavy Forgings (1.79) (1.08) 0.18 0.08 Others 0.27 (0.06) (1.71) (0.56) Total (3.19) 1.06
Slide 48: Major Opportunities
47 Major Opportunities Roads & Highways Railways Water - National & State Highways - Metro Railways - Water transmission & distribution - Expressways - Track laying / track modernization - Lift Irrigation schemes - Special Bridges for conventional railways - Water Treatment (Incl. Desal) - Tunnels -