Top Indian Companies: Larsen & Toubro Ltd

Larsen & Toubro Ltd, commonly known as L&T, is an Indian multinational conglomerate, with business interests in engineering, construction, manufacturing, technology and financial services, headquartered in Mumbai.

The company is counted among world's top five construction companies. It was founded by two Danish engineers taking refuge in India.

As of 2020, L&T Group comprises 118 subsidiaries, 6 associates, 25 joint-venture and 35 joint operations companies, operating across basic and heavy engineering, construction, realty, manufacturing of capital goods, information technology, and financial services. Larsen & Toubro originated from a company founded in 1938 in Bombay by two Danish engineers, Henning Holck-Larsen and Søren Kristian Toubro.

L&T has weightage of 2.45% on Nifty-50 index.

Company structure

Three key products/services which L&T is engaged in are: Construction and project-related activity; manufacturing and trading activity; and engineering services. For administrative purposes, the firm has been structured into five broad categories:

Subsidiaries

As of March 2018, L&T has 93 subsidiaries, 8 associate companies, 34 joint ventures, and 33 joint operation companies.

• L&T Infrastructure Engineering Ltd. is one of India's engineering consulting firms offering technical services in transport infrastructure.

• L&T – Construction Equipment Limited: Focusing on construction equipment and mining equipment.

• L&T-Komatsu Limited was a joint-venture of Larsen and Toubro, and Komatsu Asia Pacific Pte Limited, Singapore, a wholly owned subsidiary of Komatsu Limited, Japan.

• L&T Finance: is a NBFC

• Larsen & Toubro Infrastructure Financers.

• L&T Technology Services

• Larsen & Toubro Infotech

Shareholding Pattern

Holder's Name No of Shares % Share Holding

NoOfShares 1404839267 100%

Promoters 0 0%

ForeignInstitutions 322136761 22.93%

NBanksMutualFunds 232292696 16.54%

CentralGovt 3161855 0.23%

Others 322114242 22.93%

GeneralPublic 285208119 20.3%

FinancialInstitutions 220927409 15.73%

GDR 18998185 1.35%

FY2023 Q4 and Full Year Results

L&T reported a 10 per cent rise in its consolidated net profit to Rs 3,987 crore for the quarter ended in March 2023 and announced the stepping down of non-executive chairman A M Naik from the post.

A M Naik has decided to step down as non-executive chairman of the company with effect from September 30 and L&T Chief Executive Officer & Managing Director will be re-designated as the Chairman and Managing Director from October 1, 2023, the company said in a filing.

The consolidated revenue of the company during January-March 2023 increased to Rs 58,335 crore from Rs 52,851 crore in the year-ago period, a rise of 10 per cent.

Its total expenses also surged 11 per cent to Rs 51,502 crore against Rs 46,334 crore in January-March FY22.

The Board of Directors recommended a final dividend of Rs 24 per equity share for FY23.

The company received orders worth Rs 230,528 crore at the group level during the year ended March 31, 2023, registering a healthy y-o-y growth of 19 per cent.

In a separate statement, S. N. Subrahmanyan, Chief Executive Officer of Larsen & Toubro, said, "For the first time ever, our group order inflows cross Rs 2 trillion (Rs 2 lakh crore) and our order book Rs 4 trillion is at a record high.

"Our group revenues at Rs 1.83 trillion for the year registered a growth of 17 per cent, the best we have achieved in the five last years, on the back of strong execution momentum in the projects & manufacturing portfolio and a healthy growth in IT&TS businesses."

According to the statement, the company has received orders worth Rs 2,30,528 crore at the group level during the year ended March 31, 2023, registering a y-o-y growth of 19 per cent.

During the year, orders were received across multiple segments like public spaces, hydel and tunnels, irrigation systems, ferrous metals, oil & gas, power transmission & distribution and defence sectors.

International orders at Rs 86,523 crore during the year comprised 38 per cent of the total order inflow.

The order inflow for the quarter ended March 31, 2023, stood at Rs 76,099 crore, registering a growth of 3 per cent over the corresponding quarter of the previous year. International orders at Rs 36,046 crore constituted 47 per cent of the total.

The consolidated order book of the group is at Rs 3,99,526 crore as on March 31, 2023, with international orders having a share of 28 per cent. The order book of Rs 3,99,526 crore represents a growth of 12 per cent over Rs 3,57,595 crore as on March 31, 2022.

On the outlook for the sector, it said India's economic growth continues to display encouraging resilience amidst the continuing global chaos. Prudent fiscal and monetary policy management from the government and RBI respectively has resulted in the partial decoupling of India's growth story with the rest of the world.

The government's push for growth through larger infrastructure spending is clearly evident from the enhanced budgetary allocations for FY 2023-24. PLI incentives, improved business confidence and buoyant demand conditions will continue to facilitate a positive environment. Going forward, improved tax collections for the government will support its capex-led growth aspiration.

Further, bank balance sheets are healthy providing opportunities to lend funds to projects, the company said adding the last two years have seen the global economy striving to deal with overlapping crises, the latest being the liquidity troubles after a series of global bank crises

Brokerage Outlook

Large and diversified order book provides multi-year revenue visibility.

Geojit brokerage remain optimistic on company’s outlook, looking at robust business portfolio, continuous improving execution, ability of the company to offset the cost headwinds amidst inflationary environment and strong prospects pipeline.

Hence, Geojit reiterate our BUY rating on the stock with a revised target price of Rs. 2,357 based on our SOTP methodology

ESG and Sustainability

ESG goals:

L&T aims to be carbon neutral by 2040 and water neutral by 2035.

The company's aim to achieve carbon neutrality is much ahead of the Paris Agreement deadline of 2050

With an intention to integrate its Environmental, Social and Governance (ESG) goals with business targets, Larsen & Toubro (L&T) said it is working towards becoming a 'net zero' company and has set a goal to achieve carbon neutrality by 2040 and water neutrality by 2035.