Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — H1 FY16 Earnings Presentation
57 slides from Larsen & Toubro's earnings presentation, Oct 30, 2015
Slide 1: Larsen & Toubro Investor Presentation – H1 FY16
Larsen & Toubro Investor Presentation – H1 FY16 October 30, 2015
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward looking statements concerning L&T’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The r
Slide 3: Presentation Outline
Presentation Outline Sectoral L&T Business Group Opportunities Overview Overview Performance & Outlook 3
Slide 4: Presentation Outline
Presentation Outline Sectoral L&T Business Group Opportunities Overview Overview Performance & Outlook 4
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 Market Cap FY 15 Group (30th Oct’15): Credit Ratings Professionally Revenues: Managed ₹1313 Bn CRISIL: `920 Bn AAA/Stable Company (approx. (approx. ICRA: US$ 2
Slide 6: L&T - At a Glance
At a Glance L&T L&T Market Cap (Amt. = Bn) 8651 S1,das SLwew vb ,das bb sew €L,das €1, 2eW ZL, ada ZL, JEW LL, adas bb, Jew OL, 3das OL, 4eW 60, das 60, JEW 80, das 80, JEW £0, 3425 20, 4eW 90, das 90, 4eW GO, das SO, 4eW 40, das 0, JEW £0, das £0, 2eW 70, 3485 ZO, 4eW 2) fe S ie 8 = © HNOLOGY | FIN
Slide 7: L&T – Shareholding Pattern
L&T – Shareholding Pattern Mutual Funds Others, & Pvt. Major Institutional Shareholders % Shares 3% Insurance Cos., Govt. Life Insurance Corporation of India 16.5% Financial 13% Institutions Administrator of the SUUTI 8.2% L&T & Insurance Employee Companies, HDFC Trustee Company Limited 2.2% Welfare
Slide 8: Experienced Management Team
Experienced Management Team A M Naik Group Executive Chairman BE [Mech] Joined L&T in March 1965 Diverse and vast experience in general management, Technology and E&C S. N. Subrahmanyan R Shankar Raman Shailendra Roy D. K. Sen Deputy Managing Director Whole-time Director & Whole-time Director
Slide 9: Corporate Governance
Corporate Governance L&T’s essential character revolves around values based on transparency, integrity, professionalism and accountability Four-tier Governance Structure Board of Directors Executive Management Committee (EMC) Independent Company (IC) Board Strategic Business Group (SBG) / Business U
Slide 10: Journey Towards Excellence
Journey Towards Excellence Expansion & The Beginnings Seeds of Growth Consolidation Restructuring for Value (1938-60) (1960-90) Creation (2000-14) (1990-2000) 1938: Formed as a Emerged as leading & Entered into IT, Divested non - core business partnership acclaimed Financial services and (Cement, Tr
Slide 11: L&T’s Sustainability Initiative
L&T’s Sustainability Initiative The L&T Sustainability Report 2014 is a ‘GRI Checked’ , Externally Assured, Application Level A+ report. Sustainability Thrust Areas Climate Change Energy Water Material Carbon footprint Safety Community Conservation Conservation Management mapping Accolades One of th
Slide 12: Sustainability – Environment & Social
Sustainability – Environment & Social Green Buildings All 28 L&T Campuses are zero L&T’s own – 2.1 million sq. ft. wastewater discharge Education - Over two lakh children impacted Constructed for Clients – 43.02 5 Campuses are water positive million sq. ft. Skill Building - 8 construction skills tra
Slide 13: Presentation Outline
Presentation Outline Sectoral L&T Business Group Opportunities Overview Overview Performance & Outlook 13
Slide 14: Builders to the nation
Builders to the nation Maruti Manesar (Haryana) Expansion 1320 MT FCC Regenerator – for RIL 88m Rail Bridge Jammu Udhampur Wankhede Stadium, Mumbai Baha’i Temple, Delhi Mumbai International Airport Oil & Gas Offshore Platforms 3rd Narmada High Kakrapar Nuclear Power Plant, Guj ITC Grand Chola Hotel,
Slide 15: International Footprint – Marquee Jobs
International Footprint – Marquee Jobs Stadium at Barbados Salalah Airport, Oman Glorei (Commercial Space), Muscat NMC Speciality hospital, Abu Dhabi Bhukara Hotel, Uzbeckistan World’s Longest Conveyer, Bangladesh Bulk Cement Terminal, Colombo Sabah, Malaysia Punatsangchhu HEP, Bhutan Sheikh Khalifa
Slide 16: E&C Delivery Platform
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 16
Slide 17: Quality Customer Mix
Quality Customer Mix Indian Coastguard MIAL 17
Slide 18: Multiple Alliances & Joint Ventures
Multiple Alliances & Joint Ventures Alliances Joint Ventures Pre qualifications Befula Investments Note: Some of these are project specific alliances & pre qualifications 18
Slide 19: L&T’s Business Structure
L&T’s Business Structure LARSEN & TOUBRO LTD. SUBSIDIARIES & BUSINESS VERTICALS ASSOCIATES BUILDINGS & FACTORIES L&T HYDROCARBON ENGINEERING TRANSPORTATION INFRASTRUCTURE FINANCIAL SERVICES HEAVY CIVIL INFRASTRUCTURE IT & TECHNOLOGY SERVICES WATER, SMART WORLD & COMM. INFRASTRUCTURE SPVs (BOTs) POWE
Slide 20: Presentation Outline
Presentation Outline Sectoral L&T Business Group Opportunities Overview Overview Performance & Outlook 20
Slide 21: Four Year Performance
Four Year Performance Net Sales Order Inflow 920 1,554 851 1272 745 643 1029 Billion ` Billion 793 ` Billion ` `Billion FY 12 FY 13 FY 14 FY 15 FY 12 FY 13 FY 14 FY 15 Order Book EBITDA 2,327 113.4 107.3 1,815 99.3 1,648 1,450 ` Billion 88.8 ` Billion FY 12 FY 13 FY 14 FY 15 FY 12 FY 13 FY 14 FY 15
Slide 22: Performance Highlights
Performance Highlights YoY Q2 H1 Revenues 11% 9% 88 EBITDA Margins 5 bps bps 12% Profit after Tax 16% 28% 25% Order Inflows Order Book 14% 14% 22
Slide 23: Group level Order Inflow & Order Book
Group level Order Inflow & Order Book Amount in ` Bn Order Inflow Order Book Geographical Breakup 2441 732 14% 35% 28% 2144 550 398 -25% H1 FY16 286 72% 65% 334 264 FY15 FY16 Sep'14 Sep'15 Order Inflow Order Book Q1 Q2 Domestic International Investment momentum in domestic market yet to gather pace
Slide 24: Group Performance – Sales & Costs
Group Performance – Sales & Costs % Q2 FY15 Q2 FY16 % Change ` Billion H1 FY15 H1 FY16 FY15 Change Net Sales / Revenue from 211.59 233.93 11% 401.34 436.45 9% 920.05 Operations 64.21 76.58 19% ----International Sales 112.71 142.66 27% 259.26 30% 33% 3% % of Sales 28% 33% 5% 28% 153.69 169.96 11% Mfg
Slide 25: Performance Summary – Operational Costs & Profitability
Performance Summary – Operational Costs & Profitability Sales, adm. & EBITDA, other Exp., 11.1% Q2 FY16 5.9% (11.0%) (5.6%) Material cost, 42.4% (37.0%) Staff Costs, 10.4% (10.7%) Other Opex, 14.7% Sales, adm. & EBITDA, (19.2%) Subcontracting other Exp., 11.2% H1 FY16 charges, (12.1%) 6.3% Material
Slide 26: Group Performance Summary Extracts
Group Performance Summary Extracts % Q2 FY15 Q2 FY16 % Change ` Billion H1 FY15 H1 FY16 FY15 Change 23.34 25.92 11% EBITDA 48.41 48.82 1% 113.33 11.03% 11.08% 0.1% EBITDA Margin 12.1% 11.2% -0.9% 12.3% (6.91) (8.28) 20% Interest Expenses (14.61) (15.35) 5% (28.51) (5.49) (6.94) 26% Depreciation (13.
Slide 27: Group Balance Sheet
Group Balance Sheet Incr / ` Billion Sep-15 Mar-15 (Decr) Net Worth 421.85 409.09 12.76 Minority 60.48 49.99 10.49 Borrowings (Fin. Serv.) 462.06 430.10 31.96 Other Non-Current Liabilities 485.51 406.76 78.75 Other Current Liabilities 713.25 642.07 71.18 Total Sources 2,143.15 1,938.01 205.14 Net Fi
Slide 28: Group Cash Flow (Summarised)
Group Cash Flow (Summarised) ` Billion Q1 FY16 Q2 FY16 H1 FY16 Q1 FY15 Q2 FY15 H1 FY15 Operating Profit 23.62 27.68 51.30 23.70 23.89 47.60 Direct Taxes (Paid) / Refund - Net (5.61) (8.33) (13.94) (5.21) (8.54) (13.75) Changes in Working Capital (6.34) (10.25) (16.59) (6.02) (17.21) (23.23) Net Cash
Slide 29: Segment Performance Analysis
Segment Performance Analysis 29
Slide 30: Segment Composition
Segment Composition Metallurgical & Electrical & Infrastructure Power Heavy Engineering Material Handling Automation Process Plant Electrical Standard Building & Factories EPC – Coal & Gas Ferrous Equipment Products Nuclear Power Plant Electrical Systems & Transportation Infra Thermal Power Plant No
Slide 31: Segmental Breakup of Orders – H1 FY16
Segmental Breakup of Orders – H1 FY16 HE E&A Hydrocarbon MMH 3% 4% 8% Services 4% (4%) (4%) (11%) 19% (4%) (13%) Power 4% (13%) Others 6% (5%) Power 9% MMH Infrastructure (11%) 5% HE E&A 52% (5%) 4% 1% (46%) (4%) Order Inflow (2%) Rs 550 Bn Hydrocarbon 6% (7%) Infrastructure Others 72% 3% (68%) (3%)
Slide 32: Revenue Breakup – H1 FY16
Revenue Breakup – H1 FY16 Segmental Breakup Hydrocarbon IT & TS E&A 10% 10% Fin. Services HE 5% 8% 3% MMH Devl. Proj. 2% 6% Power Others 6% 7% Geographical breakup Infrastructure 43% 32% 68% Domestic International 32
Slide 33: Infrastructure Segment
Infrastructure Segment Amount in ` Bn Revenues & Margin Revenues reflect in-line progress of execution International business growth contributed by previous years’ order wins Margin variation primarily due to job mix status 33
Slide 34: Power Segment
Power Segment Amount in ` Bn Revenues & Margin High competitive intensity for fresh orders from State Utilities/PSUs Revenue growth due to execution progress on opening Order Book Margin variation due to job mix 34
Slide 35: Metallurgical & Material Handling (MMH) Segment
Metallurgical & Material Handling (MMH) Segment Amount in ` Bn Revenues & Margin Revenue decline due to low sectorial investments and reduced Order Book Margin drop arising from under utilisations and cost overruns 35
Slide 36: Heavy Engineering Segment
Heavy Engineering Segment Amount in ` Bn Revenues & Margin Oil price drop, muted global growth and excess capacity adversely impacting business opportunity and profitability Declining revenues arising out of depleted order book Margin drop due to volume shrinkage and cost provisions 36
Slide 37: Electrical & Automation (E&A) Segment
Electrical & Automation (E&A) Segment Amount in ` Bn Revenues & Margin Flat revenues arising from depressed industrial demand Stable margins due to operational efficiencies and cost control 37
Slide 38: Hydrocarbon Segment
Hydrocarbon Segment Amount in ` Bn Revenues & Margin Challenged legacy Middle East projects nearing execution completion Middle East Hydrocarbon Capex undergoing curtailment due to oil price decline Reduced level of international operations giving rise to under-recovery of overheads Leadership team
Slide 39: IT & Technology Services Segment
IT & Technology Services Segment Amount in ` Bn Revenues & Margin Growth in end-markets seen across sectors except energy and utilities Favourable currency movement aiding top line and margins 39
Slide 40: Others Segment
Others Segment Amount in ` Bn Revenues & Margin Revenue growth driven by Realty, Valves and Industrial Machinery businesses Margins largely arising from Realty business 40
Slide 41: Developmental Projects Segment
Developmental Projects Segment Amount in ` Bn Revenues EBITDA Increase in revenues and margins (excl. Dhamra) driven by operationalization of Nabha 2nd Unit and 3 Road SPVs 41
Slide 42: Concessions Business Portfolio – 25 SPVs
Concessions Business Portfolio – 25 SPVs Roads and Bridges: Portfolio: 16 projects (1721 Km); 14 Operational Project Cost: `178 Bn Power: Portfolio: 5 projects (2270 MW); 1 Operational Project Cost: `178 Bn Ports: Portfolio: 2 projects (18 MTPA) - Operational Project Cost: `21 Bn Metros: Portfolio:
Slide 43: L&T Finance Holdings
L&T Finance Holdings ` Billion Q2 FY15 Q2 FY16 % Change FY15 Networth (Incl. Pref. Cap.) 76.50 87.11 14% 77.40 Borrowings 382.73 453.22 18% 420.91 Loans and Advances 427.62 509.86 19% 472.32 Mutual Fund Average AUM 206.73 242.80 17% 224.97 Gross NPA (%) - 150 DPD 4.29% 3.08% -1.2% 3.08% Net NPA (%)
Slide 44: Presentation Outline
Presentation Outline Sectoral L&T Business Group Opportunities Overview Overview Performance & Outlook 44
Slide 45: Infrastructure Segment – Urban Infra
Infrastructure Segment – Urban Infra Presence : Residential & Commercial Buildings, IT & Office Space, Hospitals, Shopping Malls, Educational Institutions, Luxury Hotels, Airport Terminals, and Factory Buildings Opportunities: High end residential projects by cash rich developers Affordable hous
Slide 46: Infrastructure Segment – Transportation Infra
Infrastructure Segment – Transportation Infra Presence : Roads, Elevated Corridors, Railway Construction & Airport Runways, Opportunities: Increased road build-out by NHAI with current focus on EPC projects Expressway projects by State Governments Elevated corridors and Ring Roads in major cit
Slide 47: Infrastructure Segment – Heavy Civil Infra
Infrastructure Segment – Heavy Civil Infra Presence : Metro Railways, Monorails, Hydel Power Plant construction, Nuclear (civil) plant construction, Defence Infrastructure, Special Bridges and Tunnels Opportunities: Metro & Mono Rail projects planned in multiple cities across India (to decongest u
Slide 48: Infrastructure Segment – Water & Communication
Infrastructure Segment – Water & Communication Presence : Bulk transmission of water, water treatment, waste water treatment, sewage rehabilitation, effluent treatment, telecom infrastructure and security systems Opportunities: Thrust on water infrastructure due to falling water tables across the
Slide 49: Infrastructure Segment – Power T&D
Infrastructure Segment – Power T&D Presence : Sub-stations, Transmission Lines, Solar Power projects Opportunities: Thrust on Grid Strengthening programs with increasing loads Thrust on Expansion of T&D grids with growing generation capacities as well as demand Transmission efficiency enhancem
Slide 50: Infrastructure Segment – Challenges
Infrastructure Segment – Challenges Major Challenges in Infrastructure: Investment constraints Lending capacity of Banking system Government Funding Lack of private sector interest in PPP projects Land acquisition Environmental Clearances Slow evolution of policy frameworks Pace of a
Slide 51: Power Segment
Power Segment Presence : EPC Projects in Power Capacity addition (Coal & Gas), Coal based Power Plant Equipment (Boilers, Turbines, ESP, Piping and other Power Auxiliaries) Opportunities: Base level capacity addition in Coal based Power Plants EPC prospects for gas-fired power plants in Banglade
Slide 52: Heavy Engineering & Defence
Heavy Engineering & Defence Presence : Equipment for process plants (mainly for oil and gas), Nuclear power plant equipment, Defense (mainly for navy and army) and Aerospace Opportunities: Oil & Gas equipment supply opportunities in India, Middle East, Far East, Russia, Europe and USA Nuclear Po
Slide 53: Hydrocarbon Segment
Hydrocarbon Segment Presence : Offshore Platforms, Subsea pipelines, Floating Systems, Subsea installations, Onshore Oil & Gas installations, Refineries, Petrochemical and Fertiliser Plants (EPC), Onshore pipelines, Regasification Terminals Opportunities: Select International prospects – Upstream
Slide 54: Outlook – Wide circles of influence
Outlook – Wide circles of influence
Slide 55: Thank You
Thank You Gp LARSEN & TOUBRO
Slide 56: Annexure-1: Group Profit & Loss
Annexure-1: Group Profit & Loss L&T & L&T Group Fin. Devl. ` Billion IT & TS Others (Incl. % Services * Projects H1 FY16 H1 FY15 Eliminations) Change Revenue from Operations 43.88 36.46 25.53 330.58 436.45 401.34 9% EBITDA 9.22 5.47 6.61 27.52 48.82 48.41 1% Interest Expenses (0.05) (0.17) (6.78) (8
Slide 57: Annexure 2: Group Balance Sheet
Annexure 2: Group Balance Sheet L&T & L&T Group Fin. Devl. ` Billion IT & TS Others (Incl. Inc / Services * Projects Sep-15 Mar-15 Eliminations) (Dec) Net Worth (Excl. Pref. Cap.) 24.3 35.9 61.4 300.2 421.9 409.1 12.8 Minority Interest 0.0 43.2 10.4 7.0 60.5 50.0 10.5 Borrowings 6.9 462.1^ 296.7^ 21