Larsen & Toubro: Q2FY23 Result Update
01-11-2022

Larsen & Toubro Ltd
Market Cap 285,373 Cr
CMP 2,031
EV/EBITDA 18xFY23E

Results

(INR Cr)

YoY Growth

Comments

Sales

42,800

23%

Healthy uptick in order execution

Order Book

37,2400

23%

Public capex spends are significantly higher, and state capex is yet to improve. Private capex is witnessing signs of a revival, with improved ordering from buildings and factories, and metals and mining segments.

Net Profit

2,200

23%

 

Click here for 10 year X-ray

  • L&T reported a strong 24% growth in core E&C revenues, with related order inflows at 1.3X related sales. Domestic tendering and awards were better during the quarter as compared with other countries.
  • Order inflow came from diverse segments such as the public spaces, nuclear power, irrigation, ferrous metal, health, renewables, and refinery sectors. A large part of the domestic order book of Rs. 26,800 Cr is from PSUs (42%) and states (30%), with the center (10%) and private sector accounting for an 18% share. Nearly 27% of the total order book is funded by multilateral agencies.
  • Management indicated a healthy prospect pipeline of Rs. 6,300 Cr for 6MFY23. Though it is down from Rs. 7,600 Cr during 1QFY23, the company is targeting a higher win ratio from the same.
  • The energy segment’s prospects stand at Rs1.5 tn and hi-tech manufacturing’s prospects are at Rs190 bn. However, there could be continued headwinds on the margin front.
  • Core E&C margins stood at 8.1% during 2QFY23, down 110 bps from 9.2% in 2QFY22. Margins had seen cost pressures on projects contracted at higher prices. The company has nearly 66% of projects in hi-tech engineering and 85% of projects in the infrastructure segment on a variable pricing basis.
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