Larsen & Toubro Limited · NSE:LT
Larsen & Toubro — Q4 FY2022 Earnings Presentation
59 slides from Larsen & Toubro's earnings presentation, May 12, 2022
Slide 1: Investor Presentation Q4 / FY22
LARSEN & TOUBRO Investor Presentation Q4 / FY22 May 12th, 2022
Slide 2: 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 3: L&T Overview
01 L&T Overview EPC Projects Hi-Tech Manufacturing Services 3
Slide 4: L&T – At a Glance
L&T – At a Glance India’s largest E&C company with interests in EPC Projects, Hi- Tech Manufacturing and Services. Revenues Credit Rating Market Capitalization A Professionally ₹1,565Bn CRISIL: AAA / Stable ₹ 2144Bn Managed Corporate ICRA: AAA (Stable) FY 22 Group 12th May, 2022 (approx. Group (appr
Slide 5: L&T – Shareholding Pattern
L&T – Shareholding Pattern Others, 8% Govt. Financial Institutions & Insurance Mutual Funds & Companies, Pvt. Insurance 17% Cos., 17% 31st Mar, 2022 L&T Employee FII's & GDR, 23% Trust, 14% Individuals, 21% • Listed with BSE & NSE • GDRs listed with LSE and LuxSE • L&T is one of the most widely held
Slide 6: Experienced Management Team
Experienced Management Team 1 2 3 4 5 6 7 8 9 A M Naik S. N. Subrahmanyan R Shankar Raman D. K. Sen M. V. Satish J.D. Patil Subramanian S.V. Desai T.Madhava Das Group Chairman Chief Executive Whole-time Whole-time Director Whole-time Director & Sr. Whole-time Director & Sarma Whole-Time Whole-Time O
Slide 7: Builders to the Nation
Builders to the Nation Statue of Unity, Gujarat ITC Grand Chola, Chennai Delhi International Airport – T3 Blast Furnace at Vizag Steel Plant Kakrapar Nuclear Power Project 40000 MTPA Melamine Plant Seawoods Grand Central, Navi Mumbai Multi-modal terminal at Sahibganj, Jharkhand 900 tpd High Mumbai A
Slide 8: International Footprint
International Footprint Al Rayyan Water Stadium, Treatment Qatar Plant, Qatar Gas and oil supply base project in KSA Twin Towers, Dubai Marina Cryostat for ITER project 500 kV HVDC Ethiopia - Kenya interconnect 375 MLD Sewage Treatment Plant in UAE Al Batinah Expressway Interchange, Oman 225 MW Comb
Slide 9: Value creating Integrated Business Model
Design & Engineering Fabrication & Financial Services Construction Value creating EPC Projects Integrated Business Model IT, Engineering & Realty & Infrastructure Technology Services Development Hi Tech Manufacturing EPC Projects Hi-Tech Manufacturing Services 9
Slide 10: 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 EPC Projects Hi-Tech Manufacturing Services 10
Slide 11: Marquee Customers – Projects & Manufacturing
Marquee Customers – Projects & Manufacturing Indian Coastguard EPC Projects Hi-Tech Manufacturing Services 11
Slide 12: Rewards and Recognitions
Rewards and Recognitions L&T featured in the top Mr. A. M. Naik was L&T Heavy Engineering clinched Gold Award 10 of LinkedIn’s 2022 Top conferred E&Y’s Lifetime in the ‘Overall Digital Transformation’ Companies list in India Achievement Award category while the Hazira Manufacturing Unit of L&T-MHI P
Slide 13: L&T's Business Structure
L&T’s Business Structure LARSEN & TOUBRO Business verticals Subsidiaries, JVs & Associates Buildings & Factories Financial Services Transportation Infrastructure IT & Technology Services Heavy Civil Infrastructure Infrastructure SPVs (BOTs) Water & Effluent Treatment Power T&D Realty Development Hyd
Slide 14: Key Highlights
02 Key Highlights EPC Projects Hi-Tech Manufacturing Services 14
Slide 15: 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 16: 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 17: Group Performance
03 Group Performance EPC Projects Hi-Tech Manufacturing Services 17
Slide 18: 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 19: 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 20: 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 21: Segment Performance Analysis
03 04 Segment Segment Performance Performance Analysis Analysis EPC Projects Hi-Tech Manufacturing Services 21
Slide 22: 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 23: 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 24: 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 24
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: Environment & Outlook
Environment & Outlook Covered as part of the Lakshya 2026 Strategic Plan EPC Projects Hi-Tech Manufacturing Services 35
Slide 36: Annexures
Annexures EPC Projects Hi-Tech Manufacturing Services 36
Slide 37: 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 38: 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 39: 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 40: 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 41: 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 41
Slide 42: Lakshya 2026
LARSEN & TOUBRO Lakshya 2026 42
Slide 43: 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 44: 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 45: Current Strategic Plan (FY22-26)
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 46: 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 47: 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 48: 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 49: 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 49
Slide 50: 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 51: 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 52: Sustainability Targets
Sustainability Targets EPC PROJECTS | HI-TECH MANUFACTURING | SERVICES 52
Slide 53: 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 54: 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 55: 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 56: 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 57: Thank You
Thank You EPC PROJECTS | HI-TECH MANUFACTURING | SERVICES 57
Slide 58: 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 59: Thank You
Thank You Investor Relations: P Ramakrishnan (P.Ramakrishnan@larsentoubro.com) Harish Barai (Harish.Barai@larsentoubro.com) Shalmali Dange (Shalmali.Dange@larsentoubro.com) 59 EPC Projects Hi-Tech Manufacturing Services