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Larsen & Toubro Limited — Q2 FY25
L&T delivered a robust Q2 FY25 with group revenues of INR 61,600 crore, up 21% YoY, driven by strong execution in infrastructure and hydrocarbon.
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high
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L&T delivered a robust Q2 FY25 with group revenues of INR 61,600 crore, up 21% YoY, driven by strong execution in infrastructure and hydrocarbon. Consolidated PAT grew 5% YoY to INR 3,400 crore, or 25% excluding a one-off TOD gain last year. The P&M portfolio margin improved 20bps YoY to 7.6%, while group EBITDA margin contracted 70bps to 10.3% due to the non-recurrence of the TOD gain. Order inflows were INR 80,000 crore (down 10% YoY on a high base), but the order book crossed INR 5 trillion for the first time. Management maintained FY25 guidance of 10% order inflow growth and 15% revenue growth. Key risks include geopolitical tensions in the Middle East and delayed domestic ordering.
L&T ने दूसरी तिमाही में 61,600 करोड़ रुपये की कमाई की, जो पिछले साल से 21% ज्यादा है। यह बढ़ोतरी सड़क, पुल और तेल-गैस जैसे बड़े कामों की वजह से हुई। कंपनी का मुनाफा 3,400 करोड़ रुपये रहा, जो पिछले साल से 5% ज्यादा है। पिछले साल एक बार का फायदा था, उसे हटाकर देखें तो मुनाफा 25% बढ़ा। कंपनी को 80,000 करोड़ रुपये के नए ऑर्डर मिले, और उसके पास कुल ऑर्डर 5 लाख करोड़ रुपये से ज्यादा हो गए। मैनेजमेंट का कहना है कि इस साल ऑर्डर 10% और कमाई 15% बढ़ेगी। लेकिन मिडिल ईस्ट में तनाव और सरकारी कामों में देरी से जोखिम है।
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Geopolitical risks in Middle East and Red Sea disruptions
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Order Book
INR 5.1 trillion
+13% YoY
Order book crossed INR 5 trillion milestone for the first time, with 60% domestic and 40% international.
Order Inflows (P&M)
INR 63,000 crore
-14% YoY
Decline due to high base from ultra-mega hydrocarbon orders in Q2 FY24; sequential growth of 13%.
Net Working Capital to Sales
12.2%
-450bps YoY
Improved 170bps sequentially and 450bps YoY, driven by strong customer collections.
ROE (TTM)
16.1%
+80bps YoY
Improved 140bps sequentially and 80bps YoY, aided by higher profitability and capital return.
What Changed vs Last Quarter
NEW
Net working capital to revenue target of ~15% by March 2025
NWC/sales ratio expected to be around 15% as of March 2025, improved from 16.7% in Sep 2023.
UPDATED
Group order inflow growth of 10% for FY25
Management reaffirmed guidance of 10% growth in consolidated order inflows for FY25, implying ~INR 3.3 lakh crore.
UPDATED
Group revenue growth of 15% for FY25
Revenue guidance of 15% YoY growth for the group is maintained.
UPDATED
P&M portfolio margin around 8.2-8.25% for FY25
Management expects P&M EBITDA margin to remain around the FY24 level of 8.2-8.25%.
DROPPED
CapEx of ~₹4,000 crore for FY25
Capital expenditure for the year expected to be around ₹4,000 crore, in line with previous guidance.
NEW RISK
Geopolitical risks in Middle East and Red Sea disruptions
Conflicts in West Asia and Red Sea disruptions could impact global trade, costs, and project timelines.
NEW RISK
Delayed domestic ordering due to state fiscal constraints
State government CapEx may be moderated as some states divert funds to subsidies, potentially slowing order inflows.
NEW RISK
Execution risk on large fixed-price international contracts
Large hydrocarbon projects in the Middle East are fixed-price; any delay could compress margins.
NEW RISK
Hyderabad Metro losses persist despite ridership improvement
Metro reported a PAT loss of INR 2.07 billion in Q2, driven by interest costs; TOD monetization remains slow.
RISK GONE
Skilled labor shortage impacting domestic execution
Management highlighted that skilled labor shortages could slow infrastructure progress in India, exacerbated by elections and heat in Q1.
RISK GONE
Drop in hydrocarbon prospects pipeline
The prospects pipeline fell 10% YoY to ₹9.07 trillion, primarily due to a decline in hydrocarbon prospects, partly from Saudi Aramco's CapEx deferrals.
RISK GONE
Geopolitical and commodity price volatility
Headwinds from geopolitical conflicts, supply chain disruptions, and commodity price volatility could impact international operations.
RISK GONE
Hyderabad Metro losses and debt burden
Hyderabad Metro reported a loss of ₹214 crore in Q1, with a debt of ~₹12,500 crore; government support of ₹2,100 crore is pending.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q3 FY24, Q4 FY24
Working capital intensity expected to increase from 12% to 15% as legacy collections normalize.
Mentioned in Q2 FY24, Q4 FY24
Projects & Manufacturing margin expected to be similar to FY24's 8.25%, with mix and competitive pressures offset by volume growth.
Mentioned in Q1 FY24, Q3 FY24
Trimmed from earlier 8.5%-9% band due to postponement of margin recognition on new jobs into FY25.
Fast read
Guidance and risk preview
Management reaffirmed guidance of 10% growth in consolidated order inflows for FY25, implying ~INR 3.3 lakh crore.
Conflicts in West Asia and Red Sea disruptions could impact global trade, costs, and project timelines.
View Risks →