L&T Result Analysis Q1 FY2021

L&T Result Analysis Q1 FY2021

CMP: 916 (As on 23-07-2020)

Total income from operations 21,260 Cr 

29,635 Cr (-28.29%) YoY | 44,245 Cr (-51.92%) QoQ 

Year ending revenue: 145,452 Cr Vs. 141,007 Cr (2.81%)

Net Profit of 544 Cr 

1,810 Cr (-69.97%) YoY 3,562 Cr (-84.73%) QoQ 

Year ending Net profit: 10,894 Cr Vs. 8,905 Cr (-22.31%)

EPS (in Rs.) 2.16

10.48 YoY | 22.75 QoQ 

Year ending EPS: 67.95 Vs. 63.48

View: Result is in line with the expectation. YoY and QoQ revenue and profit significantly declined due to new orders dried up and ongoing projects were disrupted following the nationwide coronavirus lockdown.

Business Updates & Highlights:

Q1FY21 EBITDA is around INR 1,620 Cr Vs. 3,069 Cr in Q1FY20 therefore declined by 47.2% in YoY. EBITDA margin in Q1FY21 was 7.1% Vs. 9.7% in Q1FY20.

Company received orders worth Rs 23,574 crore during the quarter, a decline of 39%. Almost half of those orders were in the infrastructure segment. L&T’s total order book stood at Rs 3.05 lakh crore as of June 30, 2020, with international Order book constituting 24% of the total order book. 

Infrastructure segment secured orders of INR 11,349 crore, during the quarter ended June 30, 2020. The order Book of the segment stood at INR 221,115 crore as at June 30, 2020, with the international order book constituting 22% of the total Order Book. 

company would’ve reported a loss had it not been for an exceptional gain of Rs 224.7 crore and deferred tax reversal of Rs 307 crore during the quarter

The year-on-year numbers aren’t strictly comparable as last year’s figures do not include Mindtree Ltd.’s results, which L&T has acquired

Segment wise top line performance Infrastructure – 6,393 Cr declined by 53% in YoY, Hydrocarbon – 3,062 Cr declined by 19% in YoY, Power – 374 Cr declined by 33%, Heavy engineering segment – 378 Cr declined by 57%,IT & Tech – 6,043 Cr up by 57% in YoY and Financial services – 3,284 Cr declined by 5% in YoY. Except for IT sector (Mind Tree) all business vertical down in YoY.

Segment wise bottom line performance Infrastructure EBITDA 6.3% Vs. 6.4%. Hydrocarbon – EBITDA margin 5.3% Vs. 7.6%, IT & Tech – EBITDA 20.7% Vs. 23.2%, Heavy engineering EBITDA margin 17.5% Vs. 19.5% and Power segment 1.0% Vs. 3.3% in YoY.

 

Financial

ROE and ROCE is around 14% and 13% respectively and book value per share is around INR 475 and share is currently trading at 2.1x of its book value. Company is currently trading at annualized PE of around 37 which is high as per Industry benchmark. FIIs, mutual fund and insurance cos hold around 18.8%, 19.4% and 17.8% in the company.

Position: Share strong support price is INR 890. Long term investor can continue with the company. Q2/Q3 can be in the same line as per current situation. 

Share View: Share price high 1,554 (52 week) and now 921. Larsen a Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 21 billion in revenue. It operates in over 30 countries worldwide

Opportunities: The Consolidated Order Book of the Group stood at INR 305,083 crore as at June 30, 2020, with international Order Book constituting 24% of the total Order Book with strong order book despite declined in this quarter. Ordering activity in roads, urban infra particularly health care, railways, Water distribution and waste-water treatment and irrigation sub-segments are expected to pick up in the later part of the fiscal year. Company as a consolidated basis very diversified and its includes listed subsidiaries LTI (CMP: 2,340), LTTS (CMP: 1420), L&T finance Holdings (CMP: 62) and Mindtree Limited (CMP: 1013) etc. 

Risk: Company main business Infrastructure de-growth significantly in this quarter and declined by 57% in YoY and no visibility even in Q2 as well as current pandemic is going too strong and further Govt infrastructure like metro, railways, health care segment expenditure is very slow due to economy stress. On the global front the corona virus continues to cause concern and economic activity is expected to remain depressed for most of the current fiscal. World over, geo-political disputes with China are escalating and business globally are contemplating strategic shifts in the supply chain sourcing ecosystem further with increasing protectionist policies and soft oil prices, timelines and strength of economic recovery remains uncertain. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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