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Larsen and Toubro(L&T) Annual Report 2023 Summary

Updated: Oct 1, 2023

  • Larsen & Toubro is an Indian multinational engaged in EPC Projects, Hi-Tech Manufacturing and Services. It operates in over 50 countries worldwide.

  • The company is well-positioned to benefit from the prevailing economic conditions due to its expertise in infrastructure and high-tech manufacturing. It Emphasizes on leveraging technology to enhance output.

  • Company stands as a dominant player in the infrastructure sector with lucrative prospects.

  • The company has been associated with the defence sector for nearly three decades and sees optimistic opportunities ahead. The defence business does not engage in the manufacturing of any kind of explosives or ammunitions.

  • Company expects healthy IT spending globally, focusing on digital transformation.IT investments are seen as a means to improve productivity and gain higher market share.

  • Despite global uncertainty, the company registered a significant recovery across key performance parameters. Recorded revenues of ₹1,83,341 crore, marking a growth of 17% in FY 2022-23. Operational PAT of ₹10,374 crore, a growth of 21%

  • The company achieved record order inflows exceeding ₹2 lakh crore primarily from domestic order wins in Hydrocarbon and Infrastructure, with the order book standing at about ₹4 lakh crore, providing multi-year revenue visibility. This was accompanied by a 17% YoY growth, amounting to ₹1.8 lakh crore, the highest in the last five years.

  • The company continues to expand its geographical presence, reducing risk exposure to any particular region. The Middle East region remains a focus area, with expansion into new markets in Africa and South East Asia. Currently, the Middle East region constitutes 87% of the international Order Book of ₹1,11,779 crore.

  • To mitigate risks and enhance profitability, the group aims to grow its EPC Projects, Hi-Tech Manufacturing, and IT&TS businesses, with geographical diversification being a key aspect of this strategy.

  • The company has formed partnerships with various global process and technology licensors to enhance its business offerings in Hi-Tech Manufacturing and EPC Projects. Similarly, strategic collaborations have been established with global software and technology companies to bolster the IT&TS businesses.

  • The company is actively seeding and scaling up new tech-driven businesses that offer high growth potential and substantial financial returns while being asset-light.

  • A notable development was the successful merger of LTI and Mindtree, creating a combined entity with annual revenues exceeding USD 4 billion, capable of competing for projects from Fortune 1000 companies and leveraging synergies to expand its outlook and reach.

  • The divestiture of a portion of the SWC business to L&T Technology Services (LTTS) aims to transform SWC into a global solutions provider in domains such as Digital, IoT, 5G, Cyber Security, and others, by leveraging LTTS's global presence.

  • The company has been focusing on lowering gearing levels by exiting non-core and sub-scale businesses, including the sale of mutual fund business to HSBC Asset Management (India) and L&T entered into a share purchase agreement with Edelweiss Alternatives, to sell its entire 51% stake in L&T Infrastructure Development Projects Limited, a joint venture having multiple toll road concessions and a transmission line asset it its portfolio. Accordingly, the investment in the joint venture has been classified as ‘held for sale’, pending receipt of necessary approvals.

  • L&T has been investing significantly in developing precision engineering capabilities, particularly in India's space programs and defense initiatives, with these sectors gradually gaining momentum and poised for substantial growth under the government's indigenization drive.

  • The company sees potential in its e-commerce digital platforms, SuFin and EduTech, which cater to MSMEs in construction and industrial products and provide customized educational content, respectively. L&T-SuFin and L&T EduTech have been scaled-up further, post their formal launch in FY 2021-22.

  • In response to the increasing demand for data centers driven by the nationwide digitalization drive, the company formed Cloudfiniti to offer advanced technology solutions through state-of-the-art data centers and cloud infrastructure.

  • L&T is preparing to leverage the global green transition wave by developing capabilities for Green Hydrogen project installations and manufacturing facilities for electrolysers and battery cells, in collaboration with global players in the field.

  • The company's ongoing digitalization drive, initiated to enhance its future readiness, has become a pan-organization movement, already showing tangible benefits.

  • The Group previously invested in projects like Hyderabad Metro, toll roads, and power. Recently, they've been divesting to reduce involvement in public-private partnerships (PPPs).

  • L&T Data Center and Cloud Services business has been launched in FY 2022-23 with the commencement of construction of Data Centers in Panvel and Kancheepuram.

  • The Company expects financial market volatility to remain elevated as risks still continue to persist and global financial conditions remain tight. This is likely to create continued headwinds to growth and, by extension, risk assets.

  • The capital allocation philosophy of the Company is geared to support business initiatives for the profitable growth of the Company, while retaining enough liquidity to support any sudden short-term requirements of the Group.

  • Due to improved collection efficiency, the Company reduced its debt to ₹18,151 crore from ₹20,298 crore in FY 2022-23. Long-term debt will be raised in FY 2023-24 to refinance ₹4,500 crore of maturing debt and fund capital expenditure. Low gearing (Gross Debt to Equity at 0.25x) and ₹24,300 crore cash balance strengthen the Company's resilience. Post-COVID market recovery, better collection efficiency, and healthy bank position may lead to lowering cash reserves in FY 2023-24.




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