Larsen & Toubro Limited ((IN:LT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Larsen & Toubro Limited’s recent earnings call exuded a positive sentiment, highlighting significant achievements such as record-breaking order inflows and strong revenue growth. Despite facing challenges in certain sectors, the overall tone remained optimistic, driven by substantial progress in key business segments.
Record-Breaking Order Inflow
The company reported its highest ever order inflow, totaling INR 1.16 trillion, marking a remarkable 53% year-on-year growth. This surge was fueled by robust ordering momentum across various sectors, underscoring the company’s impressive market position.
Strong Revenue Growth
Larsen & Toubro’s group revenues for Q3 FY 2025 increased by 17% year-on-year. This growth was supported by strong execution momentum in the Infrastructure, Hydrocarbon, and Precision Engineering & Systems businesses, highlighting the company’s ability to capitalize on its strategic initiatives.
Significant Deal Wins in IT & Technology Services
The IT & Technology Services segment saw record-breaking deal wins, with LTIMindtree securing USD 1.68 billion and L&T Technology Services achieving its highest large deal bookings for the quarter. These wins signal robust demand and the company’s competitive edge in technology services.
Improvement in Net Working Capital
The net working capital to revenue ratio improved significantly to 12.7% as of December 2024, reflecting an enhancement of 390 basis points year-on-year. This improvement showcases the company’s efficient capital management strategies.
Successful Acquisition in Technology Sector
L&T Technology Services strengthened its market position by acquiring a 100% stake in Intelliswift. This acquisition expands its offerings in software development, platform engineering, and AI, marking a strategic move to enhance its technological capabilities.
Decline in Order Prospects Pipeline
The order prospects pipeline for the upcoming three months witnessed a 12% decline compared to December 2023, primarily due to reduced prospects in the Hydrocarbon and CarbonLite segments. This decline highlights challenges in maintaining momentum.
EBITDA Margin Decline
The group’s EBITDA margin fell to 9.7% in Q3 FY 2025 from 10.4% the previous year. This decrease was attributed to a shift in revenue mix and lower margins in the ITTS segment, indicating areas where the company needs to improve.
Challenges in Domestic Infrastructure Execution
Execution of domestic infrastructure projects faced hurdles due to delayed payments, particularly in water projects funded under the Jal Jeevan mission. These challenges emphasize the need for improved project management and funding efficiency.
Losses in Hyderabad Metro
Hyderabad Metro reported a loss of INR 2.03 billion in Q3 FY 2025, an improvement from the previous year’s loss of INR 2.54 billion. This reduction points to a gradual recovery but also highlights the ongoing financial challenges in this venture.
Forward-Looking Guidance
Larsen & Toubro’s guidance for FY 2025 reflects optimism, with expectations to exceed initial growth targets. The company anticipates a strong order prospects pipeline and a boost in government spending to drive order inflows and revenue growth beyond the previously set benchmarks, affirming its robust strategic outlook.
In summary, Larsen & Toubro’s earnings call conveyed a largely positive sentiment with substantial achievements in order inflows and revenue growth. Despite certain challenges, the company’s strategic initiatives and forward-looking guidance paint an optimistic picture for future performance, underscoring its resilience and capacity for growth.