L&T Q1 Results: Profit Up 10%, Beats Estimates

Larsen and Toubro Ltd.'s first-quarter profit for fiscal 2025 rose, surpassing analysts' estimates.

Net profit of India’s largest engineering-to-construction company increased 10.4% year-on-year to Rs 3,440 crore in the three months ended June, according to an exchange filing. That compares with the Rs 2,928.8-crore consensus estimate of analysts tracked by Bloomberg.

Revenue of the company rose 15.1% on a yearly basis to Rs 55,119.82 crore, driven by the international order execution, which contributed 48% to the total revenue during the period. Analysts tracked by Bloomberg had pegged the top line at Rs 53,768.5 crore.

The revenue was driven by the robust order execution witnessed in the projects and manufacturing portfolio on the back of a large order book, the company said in a statement.

• Revenue from operations rose 15.1% to Rs 55,119.82 crore (Bloomberg estimate: Rs 53,768.5 crore).

• Ebitda increased 15% to Rs 5,615 crore (Bloomberg estimate: Rs 5,574.1 crore).

• Margin at 10.2% versus 10.16%.

• Net profit rose 10.4% to Rs 3,440 crore (Bloomberg estimate: Rs 2,928.8 crore).

L&T's total consolidated order book rose 19% year-on-year and 3% on a sequential basis to Rs 4,90,881 crore in the April-June quarter. International orders comprise around 38% of the total order book.

Aided by strong order momentum from Middle East, inflows rose 8% year-on-year to Rs 70,936 crore in the first quarter at the group level.

Orders came across offshore vertical of hydrocarbon business, renewables, transmission and distribution, roads, nuclear power, hydel and tunnel, ferrous metals, health, and the precision engineering sectors, the company said.

Domestic order inflows were impacted by elections and intense heat conditions during the quarter. Infrastructure business that contributes around 66% to the total order book saw the domestic orders decline around 20% year-on-year, L&T's Chief Financial Officer R Shankar Raman said, adding that International orders, on the contrary, rose 42% year-on-year for the segment in the quarter.

According to Raman, the labour force migrates to villages during the elections and tend to overstay since they are meeting after a long time. It impacts order execution in that particular quarter. "It was a temporary phenomenon and we had anticipated and pre-planned for it, hence, we managed to report a 15% growth in revenues."

The company believes execution of close to Rs 5 lakh crore worth of orders, out of which 60% needs to be executed in India, will require three to four times the labour force at any point of time. "If I work with a labour force of three lakh people, I would require a database of nine lakh people to replace when the churn happens," said Raman.

According to him, consistent availability of labour can suffer under such circumstances due to safety and quality-related issues. Even, if the work force is available, it has to be a skilled workforce that is trained enough to meet the complex project requirements in the future.

If the labour moves or migrates due to festivals, harvesting or wedding season, they need to be replaced with an equally skilled work force, he said. "We need to have a database of 9 lakh people to replace with skilled labour in such case. There is no running away and organisations have to gear up to meet the requirement," Raman said.

The company sees around Rs 9 lakh crore worth of order prospects in the coming years, out of which 60% is expected from domestic market and 40% from international businesses.

"The order pipeline is very encouraging, and majority of the prospect is from the infrastructure segment (Rs 6 lakh crore), followed by energy transition (Rs 2 lakh crore) and around Rs 1 lakh crore from other segments," Raman said.

Shares of L&T closed 0.5% lower at Rs 3,522 apiece, as compared with a 0.4% fall in the benchmark BSE Sensex.