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ABOUT
Larsen & Toubro Ltd is a multinational conglomerate which is primarily engaged in providing engineering, procurement and construction (EPC) solutions in key sectors such as Infrastructure, Hydrocarbon, Power, Process Industries and Defence, Information Technology and Financial Services in domestic and international markets.
KEY POINTS
Business segments
1. Infrastructure Segment (51% of revenues) It comprises engineering and construction of buildings and factories, transportation infra, heavy civil infra, power transmission & distribution, water & effluent treatment, smart world & comm. projects and metallurgical & material handling systems. This is the core business of the company.
2. Hydrocarbon Segment (13% of revenues) It comprises complete EPC solutions for the global oil & gas industry from design through detailed engineering, fabrication, procurement, project management, construction, installation, and commissioning
3. Power Segment (3% of revenues) It comprises turnkey solutions for coal-based and gas-based thermal power plants including power generation equipment with associated systems and/ or balance-of-plant packages.
4. Defence Engineering Segment (7% of revenues)
This segment comprises design, development, serial production, and life-support of equipment, systems, and platforms for defense and aerospace sectors; and the design, construction, and repair/ refit of defense vessels. The company has been active in the defense and strategic sector since the mid-80s.
5. Heavy Engineering Segment (2% of revenues) This segment comprises the manufacture and supply of custom-designed, engineered critical equipment and systems for core sector industries like fertilizer, refinery, petrochemical, chemical, oil & gas & thermal & nuclear power. The company is amongst the top 3 players globally in the sector.
6. Others (4% of revenues)
The other businesses include realty, manufacture, sale, marketing of industrial valves, construction equipment, rubber processing, etc. It also has a presence in the mining and aviation sectors.
Service Business
1. Info. Technology Segment (25% of revenues) This segment comprises IT and integrated engineering services to many customers across the globe.
The company's IT business is divided between its 3 subsidiaries:
a. L&T Infotech Ltd
b. Mindtree
c. L&T Technology Services Ltd.
2. Financial Services Segment (~8% of revenues)
This business primarily comprises rural finance, housing finance, wholesale finance, mutual fund, and wealth management. The business is controlled by the company's subsidiary L&T Finance Holdings Ltd.
3. Development Projects Segment (3% of revenues)
It comprises the development, operation, and maintenance of basic infrastructure projects, toll and fare collection, power development, development and operation of port facilities, and providing related advisory services.
Costs FY23
The Manufacturing, Construction and Operating expenses were up by 18% and staff costs by 25% in FY23 vs FY22. Strong execution momentum in Hydrocarbon, Hi-Tech Manufacturing and IT&TS was there in FY23.
Order Book
As of FY23, company has a record-high order book of Rs 4 trillion, with Rs 2 trillion+ Order Inflow in FY23 (19% higher vs FY22). Out of these, 62% is Domestic, 16% from USA & Europe, 19% from middle east and 3% from ROW.
New Business Launched
L&T EduTech – This offers EdTech products and solutions to educational institutions, skilling bodies, working professionals, students, etc.
L&T SuFin – A B2B E-Commerce online platform launched to enable sellers to expand their sales reach, and for buyers to find their required products and services seamlessly.
Sale of Digital Business
During FY22, the Company sold its digital transformation business, L&T NxT, to Mindtree Ltd, a subsidiary of the Company, for a consideration of Rs 198 crore.
Amalgamation of Mindtree & LTI
The Board of Mindtree Limited (MT) and Larsen & Toubro Infotech Limited (LTI) have approved the amalgamation of MT with LTI. The said scheme is subject to the approval of the Shareholders, creditors, applicable regulators, and NCLT.
** Sale of Subsidiary**
Co. sold its entire stake in L&T Uttaranchal Hydropower Limited (L&T UHPL) to ReNew Power Services Private Limited (ReNew) for a total consideration of Rs. 1,003 crores.
Sale of Electric & Automation Business
In August 2020, the company sold its Electrical and automation business to Schneider Electric; a global player in energy management and automation, for 14,000 crores in an all-cash deal.
The company recorded a net gain of 8,100 crores (net of tax) on the conclusion of the divestment of the business.
Focus
Co.is targeting Group Revenues of Rs. 2.7 lakh crore and ROE of 18%+ by FY 2025-26.
Buyback
Company announced a 10,000 cr. buyback in July 2023, where they will buy back 3.33 cr. shares at a price of 3000/share via tender route
The Scrip traded around as on 17th day of January 2025 ₹3561.
Overall:
The long-term view for L&T appears positive. The company's strong fundamentals, diverse business portfolio, and focus on innovation and sustainability position it well for continued growth in the years to come. While challenges exist, L&T's proven track record and strategic initiatives suggest that it is well-equipped to navigate them and deliver value to its shareholders.
C M Financials
New Delhi
Mobile No. 9560736422
Email: cmfinanc@gmail.com
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Disclosure: Analyst/ Author/ Astrologer may or may not have any position in any of the recommended stocks. In above given information Analyst/ Author/ Astrologer does not have any position in any recommended stocks....
Author: Shashi Maini
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