Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q2/H1 FY20 Earnings Presentation
50 slides from Larsen & Toubro's earnings presentation, Oct 30, 2019
Slide 1: Exchange filing cover letter
Larsen & Toubro Limited Secretarial Department Q LARSEN & TOUBRO L&T House, Ballard Estate Narottarn Mot-at-fee Marg Murnbal - 400 001, INDIA Tel: +91 22 6752 5656 Fax: +91 22 6752 5893 vvww.Larsentoubracorn SEC/PAM/2019 October 30, 2019 The Secretary National Stock Exchange Of India Limited BSE Lim
Slide 2: Investor Presentation Q2/H1 FY20
LARSEN & TOUBRO Investor Presentation Q2/H1 FY20 October 23, 2019 1 1
Slide 3: Disclaimer
Disclaimer This presentation contains certain forward retain highly skilled professionals, time and cost looking statements concerning L&T’s future over runs on contracts, our ability to manage our business prospects and business profitability, international operations, government policies which are
Slide 4: L&T Overview
L&T Overview Engineering Manufacturing Construction Projects Technology Financial Financial Services Services 3
Slide 5: L&T – At a Glance
L&T – At a Glance India’s largest E&C company with interests in Projects, Infrastructure Development, Manufacturing, IT & Financial Services. Revenues Credit Ratings Market Cap Professionally ₹1,410Bn CRISIL: AAA / Stable ₹,2003Bn Managed Company ICRA: AAA (Stable) FY 19 Group 24th Oct, 2019 (approx
Slide 6: L&T – At a Glance
L&T – At a Glance Engineering Manufacturing Construction Projects Technology Financial Services
Slide 7: L&T – Shareholding Pattern
L&T – Shareholding Pattern Bharat ETF, Others, 0.6% 7% Govt. Mutual Financial Funds & Pvt. Institutions Insurance & Insurance Cos., Companies, 18% 20% 30th Sep, 2019 Major Institutional Shareholders % Shares L&T Life Insurance Corporation of India 14.8% Employees Trust FII’s & GDR, HDFC Mutual Fund
Slide 8: Experienced Management Team
Experienced Management Team 1 2 3 4 5 6 7 8 A M Naik S. N. R Shankar Shailendra Roy D. K. Sen M. V. Satish J.D. Patil Subramanian Group Subrahmanyan Raman Whole-time Director Whole-time Whole-time Director Whole-time Sarma Chairman Chief Executive Whole-time & Sr. Executive Vice Director & Sr. & Sr.
Slide 9: Corporate Governance
Corporate Governance L&T’s essential character revolves around values based on transparency, integrity, professionalism and accountability. Board of Directors Four-tier Governance Executive Committee Structure (ECom) Independent Company (IC) Board Strategic Business Group (SBG) / Business Unit (BU)
Slide 10: Sustainability & Integrated Report
Sustainability & Integrated Report <IR> 2018-19 available on www.Larsentoubro.com In alignment with Based on International Global Reporting Integrated Reporting Initiative (GRI) Council (IIRC) framework Standards ‘In Accordance – Comprehensive Reports progress on option’ – highest Sustainable Develo
Slide 11: Sustainability – Environment & Social
Sustainability – Environment & Social Green Product Portfolio – INR 317. 65 Billion CSR Highlights – 2.3 million beneficiaries • Theme: Building India’s Social Infrastructure • 24 campuses have achieved the ‘zero water discharge’ status • Integrated Community Development Program • Secured 500+ MV Gr
Slide 12: Business Overview
Business Overview Engineering Manufacturing Engineering Manufacturing Construction Projects Projects Technology Technology Financial FinancialServices Services 11
Slide 13: Builders to the Nation
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 Sai
Slide 14: International Footprint – Marquee Jobs
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 Khal
Slide 15: Value creating Integrated Business Model
Value creating Integrated Business Model Engineering Manufacturing Construction Projects Technology Financial Services
Slide 16: E&C Delivery Platform
E&C Delivery Platform One of Asia’s largest vertically integrated E&C Companies Design & Engineering EPC PROJECTS Construction Manufacture & Fabrication Single point responsibility for turnkey solutions Engineering Manufacturing Construction Projects Technology Financial Services
Slide 17: Quality Customer Mix
Quality Customer Mix Indian Coastguard Engineering Manufacturing Construction Projects Technology Financial Services Engineering Engineering Manufacturing Manufacturing Construction Construction Projects Projects Technology Technology Financial Financial Services Services
Slide 18: Multiple Alliances & Joint Ventures
Multiple Alliances & Joint Ventures Alliances Pre Qualifications Joint Ventures Befula Investments Note: Some of these are project specific alliances & pre qualifications Engineering Manufacturing Engineering Manufacturing Construction Construction Projects Projects Technology Technology Financial S
Slide 19: L&T's Business Structure
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 (BOTs)
Slide 20: Group Performance
Group Performance Engineering Manufacturing Construction Projects Technology Technology Financial Services Financial Services 19
Slide 21: Performance Highlights – Q2 FY20
Performance Highlights – Q2 FY20 Order Inflow +20% Recurring PAT Order Book +24% Rs 3.03 Tn EBITDA Revenue +14% +15% Engineering Manufacturing Construction Projects Technology Financial Services 20
Slide 22: Key Financial Indicators
Key Financial Indicators (Amount in ₹ bn) Q2 FY19 Q2 FY20 % Var Particulars H1 FY19 H1 FY20 % Var 403 483 20% Order Inflow 751 870 16% Order Book 2782 3032 9% 307 353 15% Revenue 577 650 13% 35 40 14% EBITDA 63 71 13% 22 25 13% Reported PAT 34 40 16% Net Working Capital 20% 23% RONW (TTM) (%) 15.2%
Slide 23: Q2/H1 FY20 Order Inflow/Order Book
Q2/H1 FY20 Order Inflow/Order Book (Amount in ₹ bn) Order Inflow Order Book 20% 16% 9% H1 FY19 H1 FY20 Q2 FY19 Q2 FY20 598 671 316 167 483 613 257 870 2782 3032 324 79 403 581 170 751 2185 2361 H1 FY19 H1 FY20 Domestic International • Growth in Order Inflows obtained from International business • Pr
Slide 24: Group Performance – Sales & Costs
Group Performance – Sales & Costs Q2 Q2 H1 H1 • Q2 revenue growth driven by % Var Rs Billion % Var FY19 FY20 FY19 FY20 Infra, Hydrocarbon and IT&TS 306.8 353.3 15% Revenue 576.8 649.6 13% businesses 33% 34% 1% International Rev. 34% 33% -1% • Fin charge opex is consequent on larger debt 192.0 208.6
Slide 25: Group Performance – EBITDA to PAT
Group Performance – EBITDA to PAT Q2 Q2 H1 H1 % Var Rs Billion % Var FY19 FY20 FY19 FY20 35.4 40.2 14% EBITDA 63.0 70.9 13% • Finance cost commensurate with debt levels and phased (4.0) (6.9) 72% Fin. Cost (7.6) (12.7) 67% commencement of Hyd. Metro (4.8) (6.3) 32% Depreciation (10.8) (10.9) 1% • Hi
Slide 26: Income Tax Expense
Income Tax Expense The Parent Company and some of the subsidiaries have computed the tax expense of the current financial year as per the tax regime announced under section 115BAA of the Income Tax Act, 1961. Accordingly, a) The provision for current and deferred tax has been determined at the rate
Slide 27: Segment Performance Analysis
Segment Performance Analysis Engineering Manufacturing Engineering Manufacturing Construction Construction Projects Projects Technology Technology Financial Financial Services Services
Slide 28: Segment Composition
Segment Composition Heavy Defence Hydrocarbon Infrastructure Power Engineering Engineering Buildings & Factories (B&F) EPC- Coal & Gas Process Plant Equipment Defence Onshore Transportation Infra (TI) Thermal Power Plant Nuclear Power Plant Aerospace Offshore Heavy Civil infra (HC) Construction Equi
Slide 29: H1 FY20 Order Inflow Composition
H1 FY20 Order Inflow Composition Others ROW USA & Europe 4% 4% 11% Infrastructure 38% Services 22% Middle East 15% Hydrocarbon 21% Domestic Defence 70% HE Power Engineering 1% 13% 1% Order Inflow Rs 870 Bn Engineering Manufacturing Construction Projects Technology Financial Services 28
Slide 30: H1 FY20 Order Book Composition
H1 FY20 Order Book Composition USA & ROW Hydrocarbon Others Europe 8% 17% 2% 1% Defence Engineering Middle 4% East 13% HE 1% Power 5% Infrastructure Domestic 71% 78% Order Book Rs 3032 Bn Engineering Manufacturing Construction Projects Technology Financial Services 29
Slide 31: H1 FY20 Revenue Composition
H1 FY20 Revenue Composition ROW Others USA & Europe 5% Infrastructure 4% 14% 47% Services 30% Middle East 14% Hydrocarbon 12% Domestic Defence 67% Engineering HE Power 3% 2% 2% Revenue Rs 650 Bn Engineering Manufacturing Construction Projects Technology Financial Services 30
Slide 32: Infrastructure Segment
Infrastructure Segment (Amount in ₹ bn) Net Revenue 9% Net Revenue 11% 165.9 152.2 H1 FY19 H1 FY20 6.8% EBITDA Margin 7.1% 6.8% EBITDA Margin 6.8% Domestic International • Public sector continues to drive Order Inflows • Strong domestic revenue growth on robust order book conversion • Margins reflec
Slide 33: Power Segment
Power Segment (Amount in ₹ bn) Net Revenue 54% Net Revenue 51% 10.6 3.9 4.8 1.0 6.7 3.8 H1 FY19 H1 FY20 Q2 FY19 Q2 FY20 6.0% EBITDA Margin 4.2% 5.0% EBITDA Margin 3.7% Domestic International • Strong order inflows in H1 replenishes order book • Revenue decline reflects depleted opening order book •
Slide 34: Heavy Engineering Segment
Heavy Engineering Segment (Amount in ₹ bn) Net Revenue 33% Net Revenue 87% 6.2 4.7 H1 FY19 H1 FY20 24.2% EBITDA Margin 24.9% 29.1% EBITDA Margin 21.7% Domestic International • Q2 Order Inflows impacted by deferments • Strong revenue growth driven by large opening Order Book • Global competence, tech
Slide 35: Defence Engineering Segment
Defence Engineering Segment (Amount in ₹ bn) Net Revenue 9% Net Revenue 20% 10.2 9.3 H1 FY19 H1 FY20 25.0% EBITDA Margin 17.9% 18.9% EBITDA Margin 17.2% Domestic International • Current policy continues to inhibit private sector participation • Execution of tracked artillery gun order continues to d
Slide 36: Hydrocarbon Segment
Hydrocarbon Segment (Amount in ₹ bn) Net Revenue 21% Net Revenue 14% 43.0 35.4 H1 FY19 H1 FY20 9.9% EBITDA Margin 12.5% 8.5% EBITDA Margin 10.2% Domestic International • Significant Order Inflows obtained from domestic & international markets • Strong revenue growth on the back of large opening Orde
Slide 37: Developmental Projects Segment
Developmental Projects Segment (Amount in ₹ bn) Net Revenue 12% Net Revenue 6% 14.5 13.0 H1 FY19 H1 FY20 4.3% EBITDA Margin 10.2% 18.3% EBITDA Margin 10.1% Nabha Hyd. Metro Kattupalli Port • Segment includes Power Development business, Hyderabad Metro • Revenue largely contributed by Power Developme
Slide 38: IT & Technology Services Segment
IT & Technology Services Segment (Amount in ₹ bn) Net Revenue 64% Net Revenue 41% 58.8 35.7 H1 FY19 H1 FY20 24.1% EBITDA Margin 19.5% 24.5% EBITDA Margin 21.0% IT TS Mindtree • Mindtree results consolidated in Q2 • LTI revenue growth led by Manufacturing and Energy & Utilities • LTTS revenue growth
Slide 39: Others Segment
Others Segment (Amount in ₹ bn) Net Revenue 7% Net Revenue 4% 15.4 14.5 H1 FY19 H1 FY20 23.1% EBITDA Margin 21.8% 24.7% EBITDA Margin 22.8% Domestic International • Segment comprises Construction & Mining Equipment, Rubber processing Machinery, Industrial Valves and Realty businesses • Q2 revenue gr
Slide 40: L&T Finance Holdings Group
L&T Finance Holdings Group Q2 FY19 Q2 FY20 % Var Rs Bn H1 FY19 H1 FY20 % Var 32.2 36.1 12% Income from Operations 63.3 72.1 14% 3.9 1.1 -71% PAT (Net of NCI) 7.4 4.6 -38% Mutual Fund Average AUM 737.5 692.1 -6% Net Loan Book 912.0 1,002.6 10% Gross Stage 3 Assets 7.1% 6.0% Net Stage 3 Assets 2.8% 2.
Slide 41: Electrical & Automation Segment
Electrical & Automation Segment (Amount in ₹ bn) Net Revenue 1% Net Revenue 4% 14.0 14.2 H1 FY19 H1 FY20 17.8% EBITDA Margin 18.2% 15.6% EBITDA Margin 17.6% Domestic International • Flat revenue growth in a soft demand environment • Margin increase reflects operational efficiencies and better realis
Slide 42: The Environment & Outlook
04 The Environment & Outlook 41 Engineering Manufacturing Construction Projects Technology Financial Services
Slide 43: Headwinds & Tailwinds
Headwinds & Tailwinds Nominal GDP Growth Order Public Sector Book Investments Balance Global Sheet Outlook Growth Business Economic Portfolio Stimulus Capability Spectrum Engineering Manufacturing Construction Projects Technology Financial Services
Slide 44: Thank You
Thank You Turn overleaf for Annexures
Slide 45: Segment Margin
Segment Margin H1 FY20 H1 FY19 Segment EBITDA EBITDA Net Revenue EBITDA Net Revenue EBITDA (Rs. (Rs. (Rs. Crore) % (Rs. Crore) % Crore) Crore) Ex‐Services business: Infrastructure Segment 30455 2061 6.8% 27359 1871 6.8% Power Segment 1045 39 3.7% 2139 107 5.0% Hydrocarbon Segment 8065 822 10.2% 7054
Slide 46: Balance Sheet
Balance Sheet Incr / Rs Billion Sep-19 Mar-19 (Decr) Equity & Reserves 633 624 9 Non Controlling Interest 91 68 23 Borrowings - Financial Services 890 915 (25) Development Projects 197 191 6 Others 242 149 93 Sources of Funds 2,054 1,948 107 Fixed Assets 152 134 18 Intangible Assets & Investment Pro
Slide 47: Cash Flow
Cash Flow Q2 FY19 Q2 FY20 Rs Bn H1 FY19 H1 FY20 39.8 45.6 Operating Profit 67.7 83.0 (0.7) (18.8) Changes in Working Capital (36.0) (85.6) (13.2) (12.9) Direct Taxes paid (22.3) (21.7) 25.9 13.9 Net Cash from Operations (A) 9.3 (24.2) (7.1) (5.5) Net Investment in Fixed Assets (incl. Intangible) (13
Slide 48: Share in Profit/(Loss) of JVs/Associates
Share in Profit/(Loss) of JVs/Associates Q2 FY19 Q2 FY20 Rs Bn H1 FY19 H1 FY20 0.39 0.61 MHPS JVs 0.81 0.93 (0.88) (0.01) IDPL & Subs. 1.67 (0.73) (0.35) (0.36) Special Steels and Heavy Forgings (0.71) (0.72) (0.13) 0.15 Others (0.14) 0.23 (0.96) 0.40 Total 1.63 (0.29) Engineering Manufacturing Cons
Slide 49: Concessions Business Portfolio – 14 SPVs
Concessions Business Portfolio – 14 SPVs Roads and Bridges Transmission Lines Metros Power (Excl. Projects under DPR) Portfolio: Portfolio: Portfolio: Portfolio: 10 projects (1048 Km) 1 project (482 Km) 1 project (71.16 Km) 2 projects (1499 MW) 10 Operational - Operational – Under-implementation 1 O
Slide 50: Major Opportunities
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 for Water Treatment (Incl. Desal) Tunnels conventional railways Efflue