Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q3 FY20 Earnings Presentation
49 slides from Larsen & Toubro's earnings presentation, Jan 29, 2020
Slide 1: Cover letter to stock exchanges: Investor Presentation
Larsen & Toubro Limited 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.La !lento ubro.com SEC/PAM/2019 January 29, 2020 The Secretary National Stock Exchange Of India Limited BSE Limited Exchange Plaza,
Slide 2: Investor Presentation Q3/9M FY20
LARSEN & TOUBRO Investor Presentation Q3/9M FY20 January 22, 2020 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 ₹ 1,871Bn Managed Company ICRA: AAA (Stable) FY 19 Group 23rd Jan, 2020 (appro
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, Govt. 0.7% 8% Financial Mutual Institutions Funds & Pvt. & Insurance Insurance Companies, Cos., 20% 18% 30th Sep, Major Institutional Shareholders % Shares 2019 Life Insurance Corporation of India 14.3% L&T Employees FII’s & GDR, HDFC Mutual Fund 4.4% T
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 – Q3 FY20
Performance Highlights – Q3 FY20 Order Inflow +2% PAT Order Book +15% +9% EBITDA Revenue +10% +6% Engineering Manufacturing Construction Projects Technology Financial Services 20
Slide 22: Key Financial Indicators
Key Financial Indicators (Amount in ₹ bn) Q3 FY19 Q3 FY20 % Var Particulars 9M FY19 9M FY20 % Var 406 416 2% Order Inflow 1157 1286 11% Order Book 2812 3063 9% 342 362 6% Revenue 919 1012 10% 38 41 10% EBITDA 101 112 12% 20 24 15% PAT 55 64 16% Net Working Capital 19.6% 23.5% RONW (TTM) (%) 15.7% 15
Slide 23: Q3/9M FY20 Order Inflow/Order Book
Q3/9M FY20 Order Inflow/Order Book (Amount in ₹ bn) Order Inflow Order Book 2% 11% 9% 9M FY20 Q3 FY19 Q3 FY20 575 726 237 179 416 850 436 1286 2812 3063 9M FY19 298 109 879 278 1157 2237 2337 406 9M FY19 9M FY20 Domestic International • Growth in Order Inflows in Q3 and 9M is largely driven by Inter
Slide 24: Group Performance – Sales & Costs
Group Performance – Sales & Costs Q3 Q3 9M 9M % Var Rs Billion % Var FY19 FY20 FY19 FY20 • Q3 revenue growth driven by Hydrocarbon and IT&TS 342.3 362.4 6% Revenue 919.2 1012.1 10% businesses 32% 36% 4% International Rev. 33% 34% 1% • Fin charge opex represents 225.4 218.5 -3% MCO Exp. 582.2 606.5 4
Slide 25: Group Performance – Profit Stack
Group Performance – Profit Stack Q3 Q3 9M 9M % Var Rs Billion % Var FY19 FY20 FY19 FY20 37.5 41.2 10% EBITDA 100.5 112.1 12% • Finance cost commensurate with debt levels and phased (5.3) (7.1) 33% Fin. Cost (13.0) (19.8) 53% commencement of Hyd. Metro (4.1) (6.6) 63% Depreciation (14.9) (17.5) 18% •
Slide 26: Segment Performance Analysis
Segment Performance Analysis Engineering Manufacturing Engineering Manufacturing Construction Construction Projects Projects Technology Technology Financial Financial Services Services
Slide 27: 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 28: 9M FY20 Order Inflow Composition
9M FY20 Order Inflow Composition Others ROW 3% 9% USA & Europe 11% Infrastructure Services 48% 24% Middle East 14% Hydrocarbon 14% Domestic Defence 66% Engineering HE Power 1% 1% 9% Order Inflow Rs 1286 Bn Engineering Manufacturing Construction Projects Technology Financial Services 27
Slide 29: 9M FY20 Order Book Composition
9M FY20 Order Book Composition Hydrocarbon ROW Others USA & 10% 15% 2% Europe 1% Defence Engineering 3% Middle East HE 13% 1% Power 6% Infrastructure Domestic 73% 76% Order Book Rs 3063 Bn Engineering Manufacturing Construction Projects Technology Financial Services 28
Slide 30: 9M FY20 Revenue Composition
9M FY20 Revenue Composition ROW Others USA & Europe 6% 4% Infrastructure 14% 47% Services 30% Middle East 14% Hydrocarbon 12% Domestic Defence 66% Engineering HE Power 3% 2% 2% Revenue Rs 1012 Bn Engineering Manufacturing Construction Projects Technology Financial Services 29
Slide 31: Infrastructure Segment
Infrastructure Segment (Amount in ₹ bn) Net Revenue -5% Net Revenue 5% 182.1 172.5 47.7 43.1 134.4 129.4 9M FY19 9M FY20 Q3 FY19 Q3 FY20 5.4% EBITDA Margin 6.1% 6.3% EBITDA Margin 6.5% Domestic International • International business drives order inflows in Q3 • Muted revenues in Q3 arising out of ex
Slide 32: Power Segment
Power Segment (Amount in ₹ bn) Net Revenue -23% Net Revenue -43% 9.1 6.9 3.8 0.9 5.3 6.0 9M FY19 9M FY20 Q3 FY19 Q3 FY20 2.9% EBITDA Margin 3.4% 4.4% EBITDA Margin 3.6% Domestic International • Strong order inflows in current year replenishes order book • Revenue decline reflects depleted opening or
Slide 33: Heavy Engineering Segment
Heavy Engineering Segment (Amount in ₹ bn) Net Revenue 20% Net Revenue 58% 7.2 6.0 4.1 3.8 3.1 2.2 9M FY19 9M FY20 Q3 FY19 Q3 FY20 20.5% EBITDA Margin 23.5% 25.4% EBITDA Margin 22.3% Domestic International • Order Inflows in current year impacted by deferments • Strong revenue growth driven by large
Slide 34: Defence Engineering Segment
Defence Engineering Segment (Amount in ₹ bn) Net Revenue 6% Net Revenue 14% 10.6 10.0 0.9 0.6 9.4 9.7 Q3 FY19 Q3 FY20 9M FY19 9M FY20 9.0% EBITDA Margin 20.5% 15.2% EBITDA Margin 18.4% Domestic International • Private sector continues to await favourable policy environment • Progress on tracked arti
Slide 35: Hydrocarbon Segment
Hydrocarbon Segment (Amount in ₹ bn) Net Revenue 17% Net Revenue 15% 43.9 37.6 22.3 20.6 17.0 21.6 9M FY19 9M FY20 Q3 FY19 Q3 FY20 8.2% EBITDA Margin 12.1% 8.4% EBITDA Margin 10.9% Domestic International • Significant Order Inflows obtained from domestic & international markets in current year • Str
Slide 36: Developmental Projects Segment
Developmental Projects Segment (Amount in ₹ bn) Net Revenue 4% Net Revenue -3% 11.9 12.4 2.3 2.3 9.6 10.1 9M FY19 9M FY20 Q3 FY19 Q3 FY20 4.2% EBITDA Margin 17.3% 14.1% EBITDA Margin 12.4% Nabha Hyd. Metro Kattupalli Port • Segment includes Power Development business, Hyderabad Metro • Revenue large
Slide 37: IT & Technology Services Segment
IT & Technology Services Segment (Amount in ₹ bn) Net Revenue 65% Net Revenue 49% 60.9 19.7 37.0 13.9 13.0 24.0 27.3 9M FY19 9M FY20 Q3 FY19 Q3 FY20 22.2% EBITDA Margin 21.0% 23.7% EBITDA Margin 21.0% IT TS Mindtree • Mindtree results consolidated from Q2 FY20 • LTI revenue growth led by Manufacturi
Slide 38: Others Segment
Others Segment (Amount in ₹ bn) Net Revenue -22% Net Revenue -10% 16.0 1.0 12.5 1.5 15.0 11.0 9M FY19 9M FY20 Q3 FY19 Q3 FY20 47.2% EBITDA Margin 21.9% 32.9% EBITDA Margin 22.5% Domestic International • Segment comprises Construction & Mining Equipment, Rubber processing Machinery, Industrial Valves
Slide 39: L&T Finance Holdings Group
L&T Finance Holdings Group Q3 FY19 Q3 FY20 % Var Rs Bn 9M FY19 9M FY20 % Var 32.6 35.5 9% Income from Operations 94.6 104.6 11% 3.9 3.8 -2% PAT (Net of NCI) 11.3 8.4 -26% Mutual Fund Average AUM 690.8 715.9 4% Net Loan Book 947.1 994.5 5% Gross Stage 3 Assets 6.7% 5.9% Net Stage 3 Assets 2.6% 2.7% N
Slide 40: Electrical & Automation Segment
Electrical & Automation Segment (Amount in ₹ bn) Net Revenue -10% Net Revenue -1% 14.7 13.3 3.6 3.6 11.1 9.7 9M FY19 9M FY20 Q3 FY19 Q3 FY20 17.4% EBITDA Margin 19.3% 16.3% EBITDA Margin 18.1% Domestic International • Muted revenue arising from a soft demand environment • Margin increase reflects op
Slide 41: The Environment & Outlook
04 The Environment & Outlook 40 Engineering Manufacturing Construction Projects Technology Financial Services
Slide 42: 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 43: Thank You
Thank You Turn overleaf for Annexures
Slide 44: Segment Margin
Segment Margin 9M FY20 9M FY 19 Segment (Rs Cr) Net EBITDA Net EBITDA EBITDA EBITDA Revenue % Revenue % Ex-Services business: Infrastructure Segment 47704 3110 6.5% 45564 2851 6.3% Power Segment 1739 62 3.6% 3044 133 4.4% Hydrocarbon Segment 12452 1352 10.9% 10815 906 8.4% Heavy Engineering Segment
Slide 45: Balance Sheet
Balance Sheet Incr / Rs Billion Dec-19 Mar-19 (Decr) Equity & Reserves 658 624 35 Non Controlling Interest 95 68 26 Borrowings - Financial Services 928 915 13 Development Projects 195 191 4 Others 247 149 98 Sources of Funds 2,123 1,948 175 Fixed Assets 150 134 16 Intangible Assets & Investment Prop
Slide 46: Cash Flow
Cash Flow Q3 FY19 Q3 FY20 Rs Bn 9M FY19 9M FY20 35.3 45.6 Operating Profit 102.9 128.7 (1.8) (11.4) Changes in Working Capital (37.8) (97.0) (13.2) (9.4) Direct Taxes paid (35.6) (31.0) 20.3 24.9 Net Cash from Operations (A) 29.6 0.7 (10.4) (9.0) Net Investment in Fixed Assets (incl. Intangible) (24
Slide 47: Share in Profit/(Loss) of JVs/Associates
Share in Profit/(Loss) of JVs/Associates Q3 FY19 Q3 FY20 Rs Bn 9M FY19 9M FY20 0.32 0.43 MHPS JVs 1.13 1.35 (0.59) 0.47 IDPL & Subs. 1.08 (1.19) (0.37) (0.30) Special Steels and Heavy Forgings (1.08) (1.03) 0.08 (0.12) Others (0.06) 0.11 (0.56) 0.48 Total 1.06 (0.75) Engineering Manufacturing Constr
Slide 48: 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 49: 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