Larsen & Toubro (L&T) expects its order book to rise to Rs 5 trillion in the next two years, if the “momentum continues”, surpassing its own earlier estimates. The company has also earmarked a capex of Rs 5,000 crore for FY24 that includes investments for data centre and electrolyser plant.

The group’s consolidated order book stood at Rs 4 trillion as on March 31, a 12% increase from Rs 3.6 trillion a year ago. In FY23, it rose 19% year-on-year to Rs 2.31 trillion from segments such as public spaces, hydel and tunnels, irrigation systems and ferrous metals.

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“I am optimistic with a reason. If this is the trend and the momentum continues, we may get there (Rs 5-trillion mark) in the next two years. There’s a good chance if election is smooth and the policy continuity is there,” R Shankar Raman, whole-time director & CFO, L&T, told FE.

L&T expects 70% of its order book to come from infrastructure, 20% from energy and the rest from other sectors.

Earlier in February, Raman said that L&T, with its fresh order run rate of about Rs 2 trillion, expects order book to rise to about Rs 4.8 trillion in the next three years. L&T has also increased its FY24 capex outlay from Rs 3,500 crore earmarked for FY23. “This (capex) would be mainly used for acquiring equipment that are required to execute projects, and these would be very project specific,” he said. Of the total, Rs 1,000 crore is for the 30-MW data centre and Rs 1,000 crore for the electrolyser plant.

On the Hyderabad Metro project, where L&T was planning to pare debt, he said it had made some progress. Of the Rs 3,000 crore sanctioned by the Telangana government, it has already collected Rs 150 crore, which has been used to reduce the debt from the earlier Rs 13,000 crore.

Further, L&T has also refinanced the entire debt with interest rates brought down to 7.5% from the earlier 10.5%, and got the government’s permission to sell real estate attached to metro. “Parallelly, the traffic has gone up to 450,000 people per day, and together with the debt coming down makes the project more viable. Following all these initiatives, we will bring down the debt to Rs 5,000 crore, and try find an investor for it,” he added.

L&T, which has guided for a 12-15% revenue growth and margins of 9% from 8.6%, expects FY24 to be better year versus FY23.

“The guidance indicates some recovery, but FY25 would be a good year as elections would be behind us. Hopefully, there will be continuity of policy and investments, but we will have to walk carefully in FY24 and make sure that we complete all the tasks that are halfway done,” Raman added.

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On inflation, he said: “Our belief is that inflation will remain at about 4-5% for maybe one year. I think the panic around the world on inflation, high interest rates and monetary policy tightening among others, should settle down.

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 “course”. “Lakshya plans will pick pace in FY25 and FY26, and I am expecting these two years to be bumper years for us,” he said.