Larsen & Toubro FY24 Annual Earnings Summary
4 quarters covered · ₹2,21,113 Cr revenue · ₹15,548 Cr PAT · 13.3% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY24Risks flagged during the year
The ongoing conflict in the Middle East could disrupt oil prices and project awards, impacting L&T's large international order pipeline (84% of international order book in Saudi Arabia).
Q3 FY24 · highAnalyst raised concern about Aramco's capex cap; management deflected by stating no impact on existing orders but acknowledged future uncertainty.
Q4 FY24 · highEscalation of West Asia conflict could disrupt supply chains and delay project awards, impacting order inflow guidance.
Q1 FY24 · mediumSubdued EBITDA margins in Q1 due to legacy EPC projects from pre-COVID era; management expects completion by Q2/Q3 FY24.
Q1 FY24 · mediumSharp increase in hydrocarbon prospects pipeline (INR 3.47 trillion) is concentrated in Middle East; any geopolitical or oil price shock could impact conversion.
Q2 FY24 · mediumLegacy COVID-impacted jobs are compressing infrastructure margins (5.4% in Q2 vs 6.6% YoY). Management expects these to conclude by FY24 end, but any delay could further pressure margins.
Q2 FY24 · mediumAnalysts questioned the margin profile of the two ultra-mega hydrocarbon orders. Management acknowledged they are fixed-price contracts and declined to provide margin expectations, raising uncertainty.
Q3 FY24 · mediumManagement acknowledged that general elections (Apr-May 2024) could temporarily slow public capex and domestic order inflows.
Q3 FY24 · mediumManagement indicated that multiple new jobs in ramp-up stage may not cross margin recognition threshold by FY24 end, pushing margin improvement to FY25.
Q3 FY24 · mediumLarge fixed-price contracts in Middle East require timely execution to realize bid margins; any delays could compress margins.
Q4 FY24 · mediumH1 FY25 may see softness in tendering and awarding due to general elections and new government formation.
Q4 FY24 · mediumAnalyst raised concern about margin guidance being lowered; management cited mix shift, delayed claims, and higher labor/logistics costs.
What changed through the year
Q1 FY24 · Order inflow growth of 10-12% for FY24
Management maintained guidance for 10-12% order inflow growth for the full year, despite strong Q1 performance.
Q1 FY24 · Revenue growth of 12-15% for FY24
Revenue growth guidance maintained at 12-15% for FY24, with Q1 revenue growth of 34% providing a strong start.
Q1 FY24 · Projects & manufacturing EBITDA margin of 9% for FY24
Full-year EBITDA margin guidance for projects and manufacturing segment remains at 9%, with first half expected to be subdued due to legacy projects.
Q1 FY24 · NWC to revenue ratio of 16-18% for FY24
Net working capital to revenue guidance maintained at 16-18% for the current year.
Q2 FY24 · Order inflow and revenue to outperform initial guidance
Management expects to exceed the initial FY24 guidance of 10-12% order inflow growth and 12-15% revenue growth, but keeps guidance open-ended due to geopolitical uncertainties.
Q2 FY24 · P&M margin guidance revised to 8.5%-9%
Projects & manufacturing EBITDA margin for FY24 is now expected in the range of 8.5%-9%, down from the initial 9% guidance, due to delayed margin recognition on new jobs.
Q2 FY24 · NWC to sales ratio guidance unchanged at 16%-18%
Net working capital to revenue ratio for FY24 is expected to remain in the 16%-18% range, supported by continued focus on collections.
Q2 FY24 · Margin trajectory to improve from FY25
Management expects margins in the projects & manufacturing portfolio to improve from the next financial year onwards, as legacy jobs conclude and new jobs ramp up.
Q3 FY24 · Order inflow growth of 20%+ for FY24
Revised upward from earlier 12% guidance, driven by strong 9-month inflows and robust prospects pipeline of ₹6.27 trillion.
Q3 FY24 · Revenue growth in high-teens for FY24
Revised upward from earlier 15% guidance, supported by strong execution momentum and large order book.
Q3 FY24 · P&M EBITDA margin band of 8.25%-8.5% for FY24
Trimmed from earlier 8.5%-9% band due to postponement of margin recognition on new jobs into FY25.
Q3 FY24 · NWC to sales ratio around 16.6% (±30bps) for FY24
Revised from 16%-18% band, reflecting sustained working capital discipline.
Q4 FY24 · Order inflow growth of ~10% in FY25
Management expects 10% growth in group order inflows over FY24's INR 3 trillion, factoring in H1 softness due to elections and a large base.
Q4 FY24 · Revenue growth of ~15% in FY25
Guided for 15% revenue growth driven by record order book and healthy execution momentum.
Q4 FY24 · P&M margin around 8.25% in FY25
Projects & Manufacturing margin expected to be similar to FY24's 8.25%, with mix and competitive pressures offset by volume growth.
Q4 FY24 · NWC to revenue at ~15% in FY25
Working capital intensity expected to increase from 12% to 15% as legacy collections normalize.