Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q1 FY20 Earnings Presentation
48 slides from Larsen & Toubro's earnings presentation, Jul 31, 2019
Slide 1: Cover letter to stock exchanges
Larsen & Toubro Limited Secretarial Department LARSEN & TOUBRO L&T House, Ballard Estate Narottam Morarjee Marg Mumbai - 400 001, INDIA Tel: +91 22 6752 5656 Fax: +91 22 6752 5893 www.Larsentoubro.com SEC/PAM/2019 July 31, 2019 The Secretary National Stock Exchange Of India Limited BSE Limited Excha
Slide 2: Investor Presentation Q1 FY20
1 Investor Q1 FY20 Presentation July 23, 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 (26th July, 2019): CRISIL: AAA / Stable Managed Company (approx.US$ 20 Bn) ₹ 1953
Slide 6: L&T – At a Glance
L&T - At a Glance 6L1'Z 086‘! GAL‘b gee‘t 98s‘t ZLp‘h Gee‘h €eh G9E‘t —~ 86S‘t a €SE‘t ogi ‘h Ee O€Z =z Org oO 086 S 008 oa) 08 = 200°} LETS = 616 Ve 686 - Oe GhL p88 208 6b 9G vee 00z 671 901 WL 6}-unr 6L4eW 81,das gL4ew Li,das ZLdew 91,das 9 Lew Gi.das GL dew vL,das vLJew €1,das €4, Jew ZL, Jas ZL
Slide 7: L&T – Shareholding Pattern
6 L&T – Shareholding Pattern Bharat ETF,Others, 0.6% 6% Govt. Financial Mutual Major Institutional Shareholders % Shares Institutions Funds & Pvt. & Insurance Insurance Companies, Life Insurance Corporation of India 15.9% Cos., 22% HDFC Mutual Fund 3.9% 17% 30th June, ICICI Prudential Life Insurance
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 – Q1 FY20
19 Performance Highlights – Q1 FY20 +21% +20% +10% +9% +11%
Slide 21: Key Financial Indicators
20 Key Financial Indicators Amount in Rs bn Q1 FY19 Particulars Q1 FY20 % Var 348 Order Inflow 387 11% 2687 Order Book 2940 9% 270 Revenue 296 10% 28 EBITDA 33 20% 12 Reported PAT 15 21% 21% Net Working Cap (Incl. E&A) 23% 2% 14.6% RONW (TTM) (%) 15.4% +80bps
Slide 22: Q1 FY20 Order Inflow / Order Book
21 Q1 FY20 Order Inflow / Order Book Amount in Rs bn Order Inflow 387 348 • Order Inflow momentum sustained through PSU & Private Sector orders • Award delays slow down International Order Inflow Order Book • Robust Order Book provides hedge against cyclicality 9% 2631
Slide 23: Group Performance – Sales & Costs
22 Group Performance – Sales & Costs Rs Billion Q1 FY19 Q1 FY20 % Var • Revenue growth driven by Infra, Heavy Engineering , Revenue 270.0 296.4 10% IT&TS and Fin Serv businesses International Rev. 35% 31% -3% • Higher Fin charge opex reflects increase in borrowing MCO Exp. 164.9 179.4 9% costs and l
Slide 24: Group Performance – EBITDA to PAT
23 Group Performance – EBITDA to PAT Rs Billion Q1 FY19 Q1 FY20 % Var EBITDA 27.6 33.2 20% • Growth in other income on higher Other Income 2.3 3.8 69% investment base Fin. Cost (3.6) (5.9) 61% • Finance cost commensurate with Depreciation (6.0) (4.6) -24% debt levels and phased commencement of Hyd.
Slide 25: Segment Performance Analysis
24 Segment Performance Analysis
Slide 26: Segment Composition
25 Segment Composition Heavy Defence Infrastructure Power Hydrocarbon Engineering Engineering Buildings & Factories (B&F) Process Plant EPC- Coal & Gas Equipment Defence Transportation Infra (TI) Onshore Heavy Civil infra (HC) Thermal Power Plant Construction Nuclear Power Plant Water & Effluent Tre
Slide 27: Q1 FY20 Order Inflow Composition
26 Q1 FY20 Order Inflow Composition Defence Engg. 1.1% Hydrocarbon HE 8.9% 0.5% Services 21.9% Power Order Inflow 17.3% Others Rs 387 Bn 5.1% Middle East 10.1% Infrastructure 45.2% USA & Europe 8.5% ROW 4.7% Domestic 76.7%
Slide 28: Q1 FY20 Order Book Composition
27 Q1 FY20 Order Book Composition HE 1.4% Defence Engg. 3.8% Power 4.4% Hydrocarbon 13.7% Others 2.3% Order Book Rs 2940 Bn Infrastructure Middle East 74.4% 11.4% USA & Europe 0.8% ROW 9.0% Domestic 78.8%
Slide 29: Q1 FY20 Revenue Composition
28 Q1 FY20 Revenue Composition Services Defence Engg. Hydrocarbon 28.6% 3.3% 12.7% HE 3.0% Revenue Power Others Rs 296 Bn 1.9% 3.9% Middle East 14.7% Infrastructure USA & Europe 46.8% 11.4% ROW 5.1% Domestic 68.7%
Slide 30: Infrastructure Segment
29 Infrastructure Segment Amount in Rs bn Net Revenue • Order Inflow contributed by Public & Private sector 14% • Strong revenue growth on robust order book conversion across business verticals • Margins reflect stage of execution and job mix 6.8% EBITDA Margin 6.4%
Slide 31: Power Segment
30 Power Segment Amount in Rs bn Net Revenue • Receipt of large EPC order replenishes Q1 Order Book • FGD & SCR investments provide opportunity within 48% demand supply imbalances in the sector • Revenue decline reflects low opening order book • Margins reflective of job mix & stage of execution • P
Slide 32: Heavy Engineering Segment
31 Heavy Engineering Segment Amount in Rs bn Net Revenue • Q1 Inflows impacted by deferments • Stellar revenue growth driven by healthy opening 162% Order Book • Global competence, technology differentiation, proven track record and cost efficiencies yield strong margins. 36.1% EBITDA Margin 19.5% P
Slide 33: Defence Engineering Segment
32 Defence Engineering Segment Amount in Rs bn Net Revenue • Slow pace of policy change continues to inhibit private sector participation 33% • Execution of tracked artillery gun order continues to drive revenue growth & margins • Margins reflect stage of execution, job mix and 11.1% EBITDA Margin 1
Slide 34: Hydrocarbon Segment
33 Hydrocarbon Segment Amount in Rs bn Net Revenue • Q1 Order Inflows from domestic awards 7% • Revenue growth on the back of higher Order Book • Firm oil prices leading to healthy prospect pipeline • Stable margins maintained through efficient execution 7.0% EBITDA Margin 7.6%
Slide 35: IT & Technology Services Segment
34 IT & Technology Services Segment Amount in Rs bn Net Revenue • LTI revenue growth led by CPG, Retail & Pharma, High-Tech, Media & Entertainment, and 15% Energy & Utilities • LTTS revenue growth led by Transportation, Plant Engineering and Medical Devices verticals • Margin reduction on increased
Slide 36: Developmental Projects Segment
35 Developmental Projects Segment Amount in Rs bn • Segment includes Power Net Revenue Development business, Hyderabad Metro • Kattupalli Port divestment drove revenues & margins for PY 21% • Revenue largely contributed by Power Development Business • Hyderabad Metro: Partial CoD of 30 Km in Nov’17,
Slide 37: Others Segment
36 Others Segment Amount in Rs bn Net Revenue • Segment comprises Construction & Mining Equipment, Rubber processing 14% Machinery, Industrial Valves and Realty businesses • PY revenues included bulk handover of apartments in Parel project • Margin fluctuation due to business mix variation 26.5% EBI
Slide 38: L&T Finance Holdings Group
37 L&T Finance Holdings Group Rs Bn Q1 FY19 Q1 FY20 % Var Income from Operations 30.6 34.6 13% PAT (Net of NCI 3.6 3.5 -2% Mutual Fund Average AUM 711.2 735.0 3% Net Loan Book 863.2 999.0 16% Gross Stage 3 Assets 7.9% 5.7% -220bps Net Stage 3 Assets 3.2% 2.5% -70 bps Networth 119.5 139.9 17% • Stron
Slide 39: Electrical & Automation Segment
38 Electrical & Automation Segment Amount in Rs bn Net Revenue • Revenue growth aided by Standard Products and 6% Meters business • Margin increase reflects operational efficiencies and better realisation 13.3% EBITDA Margin 16.9% E&A is classified as discontinued operations in Financial Statements
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: Segment Margins
42 Segment Margins Amount in Rs Cr Q1 FY20 Q1 FY19 Segment Remarks Net EBITDA Net EBITDA EBITDA EBITDA Revenue % Revenue % Ex-Services business: Infrastructure Segment 13,865 881 6.4% 12,135 830 6.8% Power Segment 561 18 3.3% 1,080 44 4.1% Hydrocarbon Segment 3,763 285 7.6% 3,511 247 7.0% Heavy Engi
Slide 44: Balance Sheet
43 Balance Sheet Incr / Rs Billion June-19 Mar-19 (Decr) Equity & Reserves 640 624 16 Non Controlling Interest 73 68 5 Borrowings - Financial Services 929 915 14 Development Projects 201 191 10 Others 213 149 63 Sources of Funds 2,056 1,948 108 Fixed Assets 127 134 (7) Intangible Assets & Investment
Slide 45: Cash Flow
44 Cash Flow Rs Billion Q1 FY20 Q1 FY19 Operating Profit 37.4 27.9 Changes in Working Capital (66.9) (31.9) Direct Taxes paid (8.7) (9.4) Net Cash from Operations (A) (38.2) (13.4) Net Investment in Fixed Assets (incl. Intangible) (4.5) (6.5) Net (Purchase)/ Sale of Long Term investments (61.4) 3.4
Slide 46: Share in Profit/(Loss) of JVs/Associates
45 Share in Profit/(Loss) of JVs/Associates Rs Bn Q1 FY19 Q1 FY20 MHPS JVs 0.42 0.31 IDPL & Subs. 2.55 (0.72) Special Steels and Heavy Forgings (0.36) (0.37) Others (0.02) 0.08 Total 2.59 (0.69)
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 (June 2019): Rs 8Bn Equity Invested at SPV level (Ju
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