Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — FY2022 Earnings Presentation
49 slides from Larsen & Toubro's earnings presentation, May 12, 2022
Slide 1: Exchange filing cover letter: Analyst Presentation FY22
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.Larsentoubro. com SEC/PAM/2022 May 12, 2022 BSE Limited National Stock Exchange Of India Limited Phiroze Jejeebhoy Towers, Exchange
Slide 2: Analyst Presentation Q4 / FY22
LARSEN & TOUBRO Analyst Presentation Q4 / FY22 May 12th, 2022
Slide 3: Disclaimer
Disclaimer This presentation contains certain forward cost over runs on contracts, our ability to looking statements concerning L&T’s future manage our international operations, business prospects and business profitability, government policies and actions with respect which are subject to a number
Slide 4: Key Highlights
01 Key Highlights EPC Projects Hi-Tech Manufacturing Services 3
Slide 5: Resilient performance in a volatile global macro backdrop
Resilient performance in a volatile global macro backdrop Order Order Revenue Margin Inflows Book Ordering momentum picks Balancing “Execution” and Q4 impact due to delayed Large, Growing & Diversified settlement of budgeted up in Q4 “Cash Generation” claims Prospects bright Liquidity Leverage Retur
Slide 6: Key Financial Indicators
Key Financial Indicators (Rs. bn) Q4 Q3 Q4 (y-o-y) (q-o-q) Particulars FY21 FY22 (y-o-y) FY21 FY22 FY22 507 504 739 46% 47% Order Inflow 1755 1930 10% Order Book 3274 3576 9% 481 396 529 10% 34% Revenue 1360 1565 15% 13.3% 11.5% 12.3% EBITDA (%) 11.5% 11.6% 34 21 36 6% 76% Operational PAT 70 86 23%
Slide 7: Group Performance
02 Group Performance EPC Projects Hi-Tech Manufacturing Services 6
Slide 8: Q4/FY22 Order Inflow/Order Book
Q4/FY22 Order Inflow/Order Book (Amount in Rs. bn) Order Inflow Order Book 46% 10% 9% Q4 FY22 688 FY22 417 322 739 1089 841 1930 952 3274 3576 Q4 FY21 FY21 1275 480 1755 2586 2624 323 184 507 FY21 FY22 Domestic International • Q4 order inflows mainly from Infrastructure, Hydrocarbon & Defence; incre
Slide 9: Group Performance – Sales & Costs
Group Performance – Sales & Costs Remarks for the Quarter • Infrastructure and IT&TS businesses drive Q4 FY21 Q4 FY22 % Var Rs Billion FY21 FY22 % Var revenue growth • MCO expense variation is reflective of job 480.9 528.5 10% Revenue 1359.8 1565.2 15% progress, revenue mix and higher input costs 33
Slide 10: Group Performance – Profit Parameters
Group Performance – Profit Parameters Remarks for the Quarter Q4 FY21 Q4 FY22 % Var Rs Billion FY21 FY22 % Var • Finance cost commensurate with reduced 63.9 65.2 2% EBITDA 156.2 182.2 17% level of borrowing at Parent, Metro (8.5) (7.1) -17% Fin. Cost (39.1) (31.3) -20% refinancing aids improvement (
Slide 11: Segment Performance Analysis
03 04 Segment Segment Performance Performance Analysis Analysis EPC Projects Hi-Tech Manufacturing Services 10
Slide 12: Segment Composition
Segment Composition Hydrocarbon Heavy Defence Others Infrastructure Power Power Engineering (HE) Engineering Buildings & Factories (B&F) Onshore EPC- Coal & Gas Process Plant Equipment Realty Defence Transportation Infra (TI) Offshore Thermal Power Plant Nuclear Power Plant Industrial Machinery & Ae
Slide 13: Order Inflow Composition
Order Inflow Composition Q4 FY22 Rs. 739 Bn FY22 Rs. 1930 Bn Power, 1% HE, 2% Power, 0.3% HE, 1% Defence, 4% Services, 17% Defence, 7% Services, 25% Hydrocarbon, 16% Hydrocarbon, 10% Infrastructure, 61% Infrastructure, 48% Others, 3% Others, 4% Middle Middle East, 28% East, 25% USA & USA & Europe, E
Slide 14: Order Book Composition as on 31-Mar-22
Order Book Composition as on 31-Mar-22 Power, 2% HE, 1% Defence, 4% Middle East, 20% Hydrocarbon, 16% USA & Europe, Infrastructure, 73% Domestic, 73% 0.4% ROW, 6% Others, 4% Order Book Rs. 3576 Bn EPC Projects Hi-Tech Manufacturing Services 13
Slide 15: Revenue Composition
Revenue Composition Q4 FY22 Rs. 529 Bn FY22 Rs. 1565 Bn Power, 3% HE, 2% Power, 3% HE, 2% Defence, 2% Services, 24% Defence, 2% Services, 31% Hydrocarbon, 12% Hydrocarbon, 10% Infrastructure, 56% Infrastructure, 46% Others, 3% Others, 4% Middle Middle Middle Middle East, 11% USA & East,East, 12% 13%
Slide 16: Infrastructure Segment
Infrastructure Segment (Amount in Rs. bn) Net Revenue 13% Net Revenue 18% 297.3 614.3 724.0 262.4 Q4 FY21 Q4 FY22 FY21 FY22 11.5% EBITDA Margin 9.2% 8.5% EBITDA Margin 8.2% Domestic International • Strong pickup in order inflows in Q4; renewed traction in International markets • Healthy prospect pip
Slide 17: Hydrocarbon Segment
Hydrocarbon Segment (Amount in Rs. bn) Net Revenue 3% Net Revenue 13% 54.1 52.4 169.2 191.7 Q4 FY21 Q4 FY22 FY21 FY22 12.5% EBITDA Margin 9.7% 9.2% EBITDA Margin 8.7% Domestic International • Receipt of multiple domestic & international orders buoys order book • Q4 Revenue impacted due to temporary
Slide 18: Power Segment
Power Segment (Amount in Rs. bn) Net Revenue 22% Net Revenue 39% 14.8 31.7 44.2 12.2 FY21 FY22 Q4 FY21 Q4 FY22 8.5% EBITDA Margin 5.2% 4.6% EBITDA Margin 3.9% Domestic International • Subdued ordering environment continues in thermal business • Opening order book drives healthy execution • Q4 PY mar
Slide 19: Heavy Engineering Segment
Heavy Engineering Segment (Amount in Rs. bn) Net Revenue 13% Net Revenue 0% 10.0 27.1 27.2 8.7 Q4 FY21 Q4 FY22 FY21 FY22 29.3% EBITDA Margin 24.7% 19.7% EBITDA Margin 19.0% Domestic International • Deferral of awards impacted order inflows during the quarter • Late receipt of orders in current year
Slide 20: Defence Engineering Segment
Defence Engineering Segment (Amount in Rs. bn) Net Revenue 21% Net Revenue 5% 11.4 34.0 32.2 8.9 Q4 FY21 Q4 FY22 FY21 FY22 29.3% EBITDA Margin 23.3% 22.2% EBITDA Margin 20.2% Domestic International • Robust order inflow growth in Q4. Positive medium-term outlook • Revenue reflective of stage of exec
Slide 21: Developmental Projects Segment
Developmental Projects Segment (Amount in Rs. bn) Net Revenue 2% Net Revenue 21% 11.1 11.0 36.2 43.7 Q4 FY21 Q4 FY22 FY21 FY22 8.5% EBITDA Margin 2.4% 5.4% EBITDA Margin 2.3% Power Development Hyd Metro • Segment includes Power Development business (Thermal – Nabha Power & Hydel up to the date of it
Slide 22: IT & Technology Segment
IT & Technology Segment (Amount in Rs. bn) Net Revenue 30% Net Revenue 27% 87.6 254.6 322.6 67.6 Q4 FY21 Q4 FY22 FY21 FY22 24.5% EBITDA Margin 24.1% 23.5% EBITDA Margin 23.6% LTI LTTS Mindtree • LTI revenue growth led by BFSI and Hi-Tech, Media & Entertainment • LTTS revenue growth led by Transporta
Slide 23: Others Segment
Others Segment (Amount in Rs. bn) Net Revenue 0% Net Revenue 2% 18.3 18.2 58.5 59.9 Q4 FY21 Q4 FY22 FY21 FY22 14.1% EBITDA Margin 19.3% 21.0% EBITDA Margin 17.4% Domestic International • Segment comprises Realty, Industrial Machinery & Products and Digital businesses • Strong Q4 revenue growth in Re
Slide 24: Financial Services Segment
Financial Services Segment Q4 Q4 % Var Rs. Bn FY21 FY22 % Var FY21 FY22 33.8 29.6 -12% Income from Operations 134.0 119.7 -11% 2.7 3.4 28% Reported PAT 9.7 10.7 10% 1.8 2.2 21% PAT (Net of NCI) accruing to the group 6.3 6.8 8% Book 940.1 883.4 -6% Gross Stage 3 Assets 4.97% 3.80% Net Stage 3 Assets
Slide 25: Environment & Outlook
Environment & Outlook Covered as part of the Strat Plan EPC Projects Hi-Tech Manufacturing Services 24
Slide 26: Annexures
Annexures EPC Projects Hi-Tech Manufacturing Services 25
Slide 27: Balance Sheet
Balance Sheet Rs Billion Mar-21 Mar-22 Incr / (Decr) Equity & Reserves 759 824 65 Non Controlling Interest 121 130 9 Borrowings - Financial Services 865 841 -23 Development Projects 206 181 -25 Others 255 213 -43 Sources of Funds 2205 2188 -17 Fixed Assets (incl ROU assets) 138 137 -1 Intangible Ass
Slide 28: Cash Flow
Cash Flow Q4 FY21 Q3 FY22 Q4 FY22 Rs Bn FY21 FY22 67.3 46.9 67.2 Operating Profit 163.4 189.6 46.1 (26.9) 52.4 Changes in Working Capital [(Inc)/Dec] 52.5 6.2 (12.4) (11.6) (13.2) Direct Taxes (Paid) / Refund [Net] (34.7) (45.5) 101.0 8.4 106.4 Net Cash from / (used in) Operations (A) 181.3 150.3 Ne
Slide 29: Segment Margin – Q4 FY22
Segment Margin – Q4 FY22 Q4 FY21 Q4FY22 Segment (Rs Cr) EBITDA EBITDA Net Revenue EBITDA Net Revenue EBITDA % % Infrastructure Segment 26240 3020 11.5% 29727 2735 9.2% Hydrocarbon Segment* 5412 677 12.5% 5237 511 9.7% Power Segment 1216 103 8.5% 1480 77 5.2% Heavy Engineering Segment 999 293 29.3% 8
Slide 30: Segment Margin – FY22
Segment Margin –FY22 FY21 FY22 Segment (Rs Cr) EBITDA EBITDA Net Revenue EBITDA Net Revenue EBITDA % % Infrastructure Segment 61431 5227 8.5% 72404 5920 8.2% Hydrocarbon Segment* 16925 1549 9.2% 19175 1671 8.7% Power Segment 3174 147 4.6% 4418 172 3.9% Heavy Engineering Segment 2712 536 19.7% 2724 5
Slide 31: Share in Profit/(Loss) of JVs/Associates
Share in Profit/(Loss) of JVs/Associates Q4 FY21 Q4 FY22 Rs Bn FY21 FY22 0.89 0.32 L&T Power JVs 1.95 1.51 0.81 0.93 L&T IDPL Group -0.64 0.21 - - L&T Special Steels and Heavy Forgings -0.73 - -0.10 0.07 Others -0.44 -0.44 1.60 1.32 Total 0.14 1.28 EPC Projects Hi-Tech Manufacturing Services 30
Slide 32: Lakshya 2026
LARSEN & TOUBRO Lakshya 2026 31
Slide 33: Macro Context – Medium Term (3-5 years)
Macro Context – Medium Term (3-5 years) Domestic International ➢ Structural reforms to improve quality of India’s growth ➢ Enhanced GCC capex post recovery in oil prices ➢ Pickup in “Manufacturing” in this “MAKE” decade ➢ Growing opportunities in Africa – enhanced bi-lateral / multi- ➢ Country expec
Slide 34: Previous Strategic Plan (FY17-21)
Previous Strategic Plan (FY17-21) Resilient Performance despite Macro headwinds 1 Macro backdrop: Subdued macros in the initial three years further worsened by Covid in the final years of the Strategic Plan (FY17-21) Business portfolio performance: 2 ➢ Projects & Manufacturing: Navigating headwinds
Slide 35: Current Strategic Plan (FY22-26) Imperatives
Current Strategic Current Strategic Plan (FY22-26) Plan (FY22-26) Imperatives Develop Business Value business Scale up Exit / Reduce sustainability accretive offerings to exposure to Digital and through focus growth of the ride the non-core E-Commerce on ESG and current energy businesses businesses
Slide 36: Emerging Business Portfolio
Emerging Business Portfolio EPC Projects Hi-Tech Services Others Construction Manufacturing IT & TS Realty Buildings & Factories Heavy Engineering LTI + Mindtree Smart World & Heavy Civil Communications Water LTTS Industrial Machinery & Defence Power T&D Products Data Centers & Transportation Infra
Slide 37: FY26 Strategic Plan Objectives (1/2)
FY26 Strategic Plan Objectives (1/2) Projects Hi-Tech Manufacturing Services - IT & TS Construction, Hydrocarbon, Power, Defence, Heavy Engineering, LTI + Mindtree & LTTS Green EPC Electrolyzers, Battery ➢ New Initiatives: ➢ Value accretive growth ➢ Momentum from existing & emerging ➢ Electrolyzers
Slide 38: FY26 Strategic Plan Objectives (2/2)
FY26 Strategic Plan Objectives (2/2) Financial Services Concessions Others Realty, Smart World & Communications, L&T Finance Holdings Hyderabad Metro, Nabha, IDPL, Green Industrial Machinery & Products ➢ Thrust towards “Retailisation” ➢ Exit Roads and Power concessions ➢ Realty: Growth in Residentia
Slide 39: Group Financial Targets
Group Financial Targets CAGR Rs Trillion, % FY21 FY22 FY26 (FY21 - FY26) Order Inflows 1.7 1.9 3.4 14% Revenue 1.4 1.6 2.7 15% ROE 10%* 11% 18%+ *(excl. exceptionals) Focus on sustainable growth and shareholder value creation EPC PROJECTS | HI-TECH MANUFACTURING | SERVICES 38
Slide 40: Revenue Composition
Revenue Composition FY21 Rs 1360 Bn FY26 Rs 2740 Bn Realty DP FS Realty Green FS 1% 3% 6% 2% Energy 10% 1% Services - Services - IT & TS IT & TS 19% Projects 27% Projects 61% 56% Manufacturing 6% Manufacturing 8% Green Energy BOO, Electrolyzers and Battery through JVs EPC PROJECTS | HI-TECH MANUFACT
Slide 41: Cash Generation and Capital Allocation
Cash Generation and Capital Allocation Cash Generation • Operations – Improved profitability and lower capital employed • Divestments – Concessions and sub-scale businesses Capex Acquisitions • Existing businesses: Projects, Manufacturing & Realty • IT&TS – White spaces Investments Debt Repayments •
Slide 42: Sustainability Targets
Sustainability Targets EPC PROJECTS | HI-TECH MANUFACTURING | SERVICES 41
Slide 43: Environment
Environment CURRENT GOING FORWARD Net Zero 2040 Total Emissions Mn tCO2e 0.8 Emission Intensity Reduction 40 % by 2026 Climate Emission Intensity tCO2e/Rev Rs bn 790-815 Renewable (% of consumption) 50 % by 2026 Change Renewable energy % 11 Efficiency improvement 2 % - 2.5 %/ Yr Mn nos. Trees Plante
Slide 44: Social
Social Major ▪ EHS Council FY20 FY21 ▪ Knowledge sharing platforms for lessons learnt initiatives ▪ Cross-business audits from FY23 Fatality 41 25 ZERO ▪ Senior Management Audits Safety Severity rate 204.3 143.6 HARM ▪ Surveillance Ratings Safety training hrs (Mn) 5.1 3.2 TARGET ▪ AR/ VR awareness p
Slide 45: Governance
Governance ASPECTS CURRENT GOING FORWARD ▪ Independent directors: 44% (Requirement - 33%) Goals for EDs and Business Heads on Environment Board ▪ Gender diversity: 5.6% and Safety parameters ▪ Supplier Code of Conduct ▪ Other policies: Sustainability, EHS, GSCM, HR, CSR, Protection ▪ Equal Opportuni
Slide 46: Governance
Governance ASPECTS CURRENT GOING FORWARD ▪ BRR & BRSR ▪ IFRS Standard for ESG Reporting Disclosures ▪ Carbon Disclosure Project (CDP) ▪ Dow Jones Sustainability Index (DJSI) ▪ AA1000 standards for reporting ▪ Global reporting Initiative (GRI) standards ▪ Taskforce on Climate-Related Financial Framew
Slide 47: Thank You
Thank You EPC PROJECTS | HI-TECH MANUFACTURING | SERVICES 46
Slide 48: Segment Reclassification Going Forward
Segment Reclassification Going Forward Current Going Forward Infrastructure Infrastructure Hydrocarbon Energy* Power Heavy Engineering Hi-Tech Manufacturing Defence Engineering IT & TS Services - IT & TS Financial Services Financial Services Development Projects Development Projects Others Others *i
Slide 49: Thank You
Thank You Investor Relations: P Ramakrishnan (P.Ramakrishnan@larsentoubro.com) Harish Barai (Harish.Barai@larsentoubro.com) Shalmali Dange (Shalmali.Dange@larsentoubro.com) 48 EPC Projects Hi-Tech Manufacturing Services