LARSEN & TOUBRO LIMITED November 16, 2017 Current Price: `1207.80 STOCK DATA BSE Code 500510 NSE Symbol LT Reuters LART.BO Bloomberg LT IN VALUE PARAMETERS Price (Rs) 1207.80 52 W H/L(Rs) 1274.00/868.00 Mkt. Cap.(Rs Cr) 169157.89 Latest Equity(Subscribed) 280.11 Latest Reserve (cons.) 49936.58 Latest EPS (cons.) -Unit Curr. 53.02 Latest P/E Ratio -cons 22.78 Latest Bookvalue (cons.) -Unit Curr. 362.20 Latest P/BV - cons 3.33 Dividend Yield -% 1.16 Face Value 2 SHARE HOLDING PATTERN (%) Description as on % of Holding 30/09/2017 Foreign 19.76 Institutions 39.29 Govt Holding 0.21 Non Promoter Corp. Hold. 7.53 Promoters 0 Public & Others 33.22 Consolidated Results In Cr. Particulars Qtr Ending Qtr Ending Sep. 17 Sep. 16 Var. (%) Sales 26446.76 24856.17 6 OPM (%) 11.20 9.30 OP 2960.43 2315.07 28 Other inc. 401.29 451.81-11 PBIDT 3361.72 2766.88 21 Interest 392.89 339.61 16 PBDT 2968.83 2427.27 22 Dep. 430.59 460.15-6 PBT 2538.24 1967.12 29 EO 136.74 402.43-66 PBT after EO 2674.98 2369.55 13 Total Tax 543.94 680.71-20 PAT 2131.04 1688.84 26 Share in Profit of Associates -110.74-156.69-29 MI 200.42 97.52 106 PAT after EO 1819.88 1434.63 27 EPS (Rs) 13.68 8.88 Engineering major Larsen and Toubro Ltd (L&T) Q2 better-than-expected profit growth of 26.2 percent L&T reported a 10% growth in consolidated net sales in June 17 quarter to Rs 23989.79 crore. Dometic L&T reported a 6% growth in consolidated net sales in Sep 17 quarter to Rs 26446.76 crore. Domestic revenue booking was affected due to GST transition and some delay in execution. OPM was up by 190 bps to 11.2% due to lower raw material costs and better job mix. Thus, OP growth was higher by 28% to Rs 2960.43 crore. Other income was lower by 11% to Rs 401.29 crore largely due to lower interest income. Interest costs were higher by 16% to Rs 392.89 crore in line with higher working capital borrowings. Depreciation was lower by 6% to Rs 430.59 crore. Thus, PBT stood at Rs 2538.24 crore, higher by 29% YoY. EO income stood at Rs 136.74 crore for Sep 17 quarter as compared to Rs 402.43 crore for Sep 16 quarter. EO income was due to profit on sale of general insurance business in Sep 16 quarter vis a vis profit on sale of investment in cutting tools business in Sep 17 quarter. Thus PBT after EO was restricted to 13% growth to Rs 2674.98 crore. With a 20% decrease in tax to Rs 543.94 crore, PAT stood at Rs 2131.04 crore, up by 26% YoY. After providing MI of Rs 200.42 crore and losses in Share of associates of Rs 110.74 crore as compared to Rs 97.52 crore and Rs 156.69 crore respectively for Sep 16 quarter, the consolidated PAT for Sep 17 quarter stood at Rs 1819.88 crore, up by 27% YoY. Consolidated Performance for Sep 17 quarter For the quarter, sales from the infrastructure segment stood at Rs 11988.68 crore and accounted for 44% of sales. PBIT from the same was up by 13% to Rs 728.85 crore and accounted for 27% of total. 1
Segment Results In Cr. Sales Qtr Ended Qtr Ended Var. % to Sep. 2017 Sep. 2016 (%) Total Infrastructure 11988.68 11596.91-3 44 Power 1667.29 1744.62 4 6 Heavy Engineering 1211.11 808.2-50 4 Electrical & Automation 1309.33 1251.79-5 5 Hydrocarbon 2561.4 2500.65-2 9 IT and Technology services 2723.84 2461.67-11 10 Financial Services 2412.95 2140.02-13 9 Developmental Projects 1415.71 1072.62-32 5 Others 1845.19 2192.71 16 7 Total 27135.5 25769.19-5 100 Less Inter segment revenue 688.74 746.94 8 Net sales 26446.76 25022.25-6 PBIT Infrastructure 728.85 644.95 13 27 Power 79.06 41.24 92 3 Heavy Engineering 125.77 80 57 5 Electrical & Automation 149.74 123.08 22 6 Hydrocarbon 248.02 142.64 74 9 IT and Technology services 530.37 450.5 18 20 Financial Services 301.6 360.64-16 11 Developmental Projects 377.61 106.66 254 14 Others 160.91 65.47 146 6 PBT before tax and interest 2701.93 2015.18 34 100 Less: Inter-Segment margin -8.91 1.58 PL Less: Interest 392.89 339.61 16 Add: Other unallocable income 357.03 695.56-49 PBT 2674.98 2369.55 13 For the quarter, sales from the Power Segment stood at Rs 1667.29 crore and accounted for 6% of sales. PBIT from the same was up by 92% to Rs 79.06 crore and accounted for 3% of total. For the quarter, sales from the Heavy Engineering segment stood at Rs 1211.11 crore and accounted for 4% of sales. PBIT from the same was up by 57% to Rs 125.77 crore and accounted for 5% of total. For the quarter, sales from the Electrical Automation segment stood at Rs 1309.33 crore and accounted for 5% of sales. PBIT from the same was up by 22% to Rs 149.74 crore and accounted for 6% of total. For the quarter, sales from the Hydrocarbon segment stood at Rs 2561.40 crore and accounted for 9% of sales. PBIT from the same was up by 74% to Rs 248.02 crore and accounted for 9% of total. For the quarter, sales from the IT and Technology services segment stood at Rs 2723.84 crore 2
and accounted for 10% of sales. PBIT from the same was up by 18% to Rs 530.37 crore and accounted for 20% of total. For the quarter, sales from the financial services Segment stood at Rs 2412.95 crore and accounted for 9% of sales. PBIT from the same was down by 16% to Rs 301.60 crore and accounted for 11% of total. For the quarter, sales from the Developmental Segment stood at Rs 1415.71 crore and accounted for 5% of sales. PBIT from the same was up by 254% to Rs 377.61 crore and accounted for 14% of total. For the quarter, sales from the Others Segment stood at Rs 1845.19 crore and accounted for 7% of sales. PBIT from the same was up by 146% to Rs 160.91 crore and accounted for 6% of total. Consolidated performance for H1 ended Sep 17 L&T reported a 8% growth in consolidated net sales in H1 ended Sep 17 to Rs 50257.62 crore. Domestic revenue booking was affected due to GST transition and some delay in execution. OPM was up by 100 bps to 10% due to lower raw material costs and better product mix. Thus, OP growth was higher by 19% to Rs 5017.16 crore. Other income was higher by 4% to Rs 786.14 crore. Interest costs were higher by 14% to Rs 757.94 crore in line with higher working capital borrowings. Depreciation was higher by 6% to Rs 981.86 crore. Thus, PBT stood at Rs 4063.50 crore, higher by 20% YoY. EO income stood at Rs 136.74 crore for H1 ended Sep 17 as compared to Rs 402.43 crore for H1 ended Sep 16. EO income was due to profit on sale of general insurance business in H1 ended Sep 16 vis a vis profit on sale of investment in cutting tools business in H1 ended Sep 17. Thus PBT after EO was restricted to 11% growth to Rs 4200.24 crore. With a 18% decrease in tax to Rs 1003.66 crore, PAT stood at Rs 3196.58 crore, up by 26% YoY. After providing MI of Rs 336.18 crore and losses in Share of associates of Rs 147.98 crore as compared to Rs 170.73 crore and Rs 330.25 crore respectively for H1 ended Sep 16, the consolidated PAT for H1 ended Sep 17 stood at Rs 2712.42 crore, up by 33% YoY. Consolidated Segmental Performance for the 6 months ended Sep 17 For the six months, sales from the infrastructure segment stood at Rs 22717.03 crore and accounted for 44% of sales. PBIT from the same was up by 8% to Rs 1429.88 crore and accounted for 32% of total. For the six months, sales from the Power Segment stood at Rs 3431.63 crore and accounted for 7% of sales. PBIT from the same was down by 30% to Rs 91.67 crore and accounted for 2% of total. For the six months, sales from the Heavy Engineering segment stood at Rs 1942.39 crore and accounted for 4% of sales. PBIT from the same was up by 33% to Rs 195.90 crore and accounted for 4% of total. For the six months, sales from the Electrical Automation segment stood at Rs 2577.74 crore and accounted for 5% of sales. PBIT from the same was up by 43% to Rs 277.93 crore and accounted for 5% of total. For the six months, sales from the Hydrocarbon segment stood at Rs 5110.63 crore and accounted for 10% of sales. PBIT from the same was up by 156% to Rs 389.69 crore and accounted for 9% of total. For the six months, sales from the IT and Technology services segment stood at Rs 5290.10 crore and accounted for 10% of sales. PBIT from the same was up by 13% to Rs 1022.34 crore and accounted for 23% of total. 3
For the six months, sales from the financial services Segment stood at Rs 4707.40 crore and accounted for 9% of sales. PBIT from the same was up by 9% to Rs 659.67 crore and accounted for 15% of total. For the six months, sales from the Developmental Segment stood at Rs 2675.57 crore and accounted for 5% of sales. PBIT from the same was up by 61% to Rs 328.42 crore and accounted for 7% of total. For the six months, sales from the Others Segment stood at Rs 3599.01 crore and accounted for 7% of sales. PBIT from the same stood at Rs 109.59 crore as compared to loss at PBIT level of Rs 6.53 crore for H1 ended Sep 16 and accounted for 2% of total. Outlook The Government's determined efforts to revive the investment sentiment while undertaking impactful economic reforms have expectedly caused transition challenges. While the potential for investment in growth remains compelling, the readjustment to the continuing impact of currency purge and the accelerated implementation of GST has upset business environment and tripped growth in an economy already beset with twin challenges of attracting investments and adhering to fiscal rectitude. Globally, the developed economies appear hopeful of a recovery and better growth prospects. The investment climate in the company's focus market Middle East continues to provide some selective opportunities despite the oil price shock and the geo political risks. The company expects that the various reforms and economic measures over the past year would take some time to stoke growth. Focus for the company continues to remain on improvement of return on equity through reduction of working capital and higher operational efficiencies. Other updates Consolidated order book stood at Rs 257526 crore, up by 2% YoY. International order book constitutes around 26% of total order book. Order inflow in Sep 17 quarter stood at Rs 28732 crore down by 8% YoY. International order inflow accounted for around 36% of total order inflows and was largely due to hydrocarbon orders. Sep 17 quarter revenue growth was led by water, services and heavy engineering businesses. Revenue to grow by around 12% in FY 18 Order inflow for FY 18 to be flat on YoY basis 4
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