Engineering and infrastructure conglomerate Larsen & Toubro (L&T) expects order inflow of about Rs 2.50-2.60 trillion in this fiscal, as it hopes Ebitda margins to recover from the fourth quarter onwards. The company now expects to complete the divestment of Infrastructure Development Projects (IDPL) by September, a top official said.
“On the order inflow, if the momentum continues and if the thrust for infrastructure build continues, if the availability of funding continues, there’s a good chance that we can do better than what we thought we will do,” L&T Group CFO R Shankar Raman told FE in interaction.
The company had earlier estimated its order book position to be around Rs 4.8 trillion in the next three years.
“This is a moving target, and we were expecting about Rs 2-2.5 trillion of orders every year. The first quarter has been good, but it is to be seen in the context of what we need to do for the year as a whole. At the moment, the environment is good, but we will do a review by the end of the year,” he added.
The company expects order book to rise by 10-12% in this year, which stands at about Rs 4.12 trillion now. L&T also expects its Ebitda margins, which fell during the quarter, to recover from the fourth quarter of this fiscal as it expects high-cost projects to be completed by then. “I am optimistic about FY25.”
In Q1, the company’s Ebitda margins fell to 10.2% from 11% posted in the year-ago period, impacted by the high-cost of jobs the company is executing now.
L&T intends to complete its Rs 10,000 crore share buyback before September 30. On Tuesday, the company’s board approved a buyback of 33.3 million shares at a maximum price of 3,000 per share.
The company’s capex of about Rs 4,000-5,000 crore – including that earmarked for data centres – for this fiscal is also on track, as all expenditure for the buyback, including working capital, has been accounted for, he added.
The company also received board approvals to invest about invest Rs 506 crore in its subsidiary L&T Energy Green Tech. This would be used for manufacturing electrolysers, which would be used to manufacture hydrogen.
On Hyderabad Metro, which had a debt of about 13,000 crore, the debt has come down by another550 crore. The debt was reduced after the Telangana gave part of a Rs 3,000 crore interest-free loan.
The ridership is closing on to 500,000 a day, with it at 425,000 per day now from 280,000 a day last year. “It has to go further,” he said, the company is also working on monetisation of the real estate assets of Rs 2,000 crore.
Following all these initiatives, the debt is expected to fall to about Rs 7,000 crore, which is “manageable”.
On the divestment of Infrastructure Development Projects (IDPL), he said, the company expects to complete by September.
“Now we’re having missed the June deadline, we are targeting to do it by September now, but definitely we’ll complete it in this financial year,” he added.
In December, L&T divested a 51% stake in Infrastructure Development Projects (IDPL) as part of its Lakshya 2026 roadmap.
On L&T’s ‘Lakshya 2026’ where the group was targeting revenues of Rs 2.7 trillion and a Return on Equity of over 18% by FY26, he said it on track.
“At the moment, we believe we are going all right, but we still have to cross the bridge,” he added.
Larsen & Toubro has an order pipeline of over `1 trillion for the remaining quarters of FY24, with more than half of it from infrastructure segment. Nearly a third is from the hydrocarbon segment and the remaining from other segments.