Engineering and infrastructure conglomerate Larsen & Toubro (L&T) is expecting its order book position to breach the Rs 5-trillion mark in the first half of next fiscal, at least a year ahead of its earlier estimates.
“The exact timeline will depend on the quantum of orders we get in Q4, and Q1 of next fiscal,” L&T CFO R Shankar Raman said in an interaction with FE on Friday. “ I am looking at Q1 as a period where there will not be any significant order growth because of the election.
Soif not this year, we might cross that Rs 5-trillion mark in the first half of next (financial) year.” The main sectors that will continue to contribute would be infrastructure and energy, while a lot of sub-sectors will also support the growth.
There are many construction opportunities coming up, like commercial residential buildings, infrastructure in public spaces such as hospitals and stadiums, and large buildings such as data centres and IT campuses, he added.
Last year, Raman had told FE the company estimated its infrastructure order book to touch Rs 5-trillion mark sometime in FY26. As of December 31, the firm’s consolidated order book stood at Rs 4.7 trillion, of which 39% were from global markets.
However, L&T, which is also into renewables, might not be keen on solar rooftops schemes announced in the interim Budget. “Solar rooftops are fairly simple to implement. So, we may not participate as we benefit from large scale acreages of solar. I think it will be done by a string of small contractors, and at the moment there is nothing which is suggesting it’ll be competitive for us to get in,” Raman added.
On the status of the semiconductor business, Raman said L&T has already incorporated a firm and had also made some senior hiring, while the hiring process for the team is under way. “It will take three-six months to assemble the team. We’re hiring people in the US, Europe, Japan and India. These are not capital-intensive projects, but we have to be clear what are the chips that we will design.”
L&T had earlier announced its foray into semiconductor design and was planning to set up a lab at an investment of up to Rs 830 crore, mainly for industrial equipment and automobiles. On the Hyderabad metro project, where L&T was planning to pare debt, Raman said there has been a lot of progress.
“The debt has come down as we got about Rs 950 crore from the government, while we also got Rs 600 crore from monetisation of the properties around the metro. These were used to repay debt. So, about Rs 1,500 crore of debt has come down,” he said.
The company is expecting to get Rs 2,000 crore from the Telangana government, and get the loan down by another Rs 3,000 crore. As of September 30, 2022, the company’s debt in the Hyderabad metro project stood at Rs 13,000 crore.
On L&T’s ‘Lakshya 2026’ plan, wherein the group is targeting revenues of Rs 2.7 trillion and a return on equity of over 18% by FY26, Raman said the project was on track”. “We have two more years to go, and we will achieve; the profitability needs to improve. There is some more hard work left, it’s not all done and dusted,” he added.