Sunday, September 24, 2023

I’d Like To Believe Rupee Will Be In Depreciation Mode Rather Than Valuing, Says L&T CFO

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  • R Shankar Raman, the company’s CFO, said they will compete to achieve 15% revenue growth for FY23, as projected at the start of the year.
  • L&T, which receives about 80% of its orders from the government, hopes private sector investment will pick up this year.
  • It expects to complete the sale of eight road projects in its portfolio by the end of March.

Infrastructure Majors Larsen and Toubro today reported net profit growth of 45% to 1,702 crore in the first quarter of 2022-23 from ₹1,174 crore in the comparable quarter last year – despite it being a seasonally weak quarter.

Revenues were also up 22%, but the company is not revising its revenue forecast for the year from 12-15% given earlier.

“We’re relieved,” said R Shankar Raman, the company’s CFO in an earnings concall about the first-quarter gig, also assuring they will try to shoot for the top of the band they’ve led, but refuse. to go. further due to domestic and international events.

“There could be monkey pox or some other Black Swan incident and we don’t know what form it will come in. There are too many moving parts to predict, but if commodity prices remain soft, some of the effects of macroeconomics could economic situation will be reversed,” Raman said.

A whopping 37% of L&T’s revenues came from international markets, but they said they’ve covered 70% of their receivables. “We are 70% hedged, but I would like to believe that the rupee will fall in value rather than rise in value. The markets we export to may have some impact,” Raman said.

The company faced fulfillment headwinds during the quarter, especially with its international orders such as supply chain issues, procurement realignment due to high raw material costs, higher ancillary costs such as power, freight, fuel and more. The international activities represent 37% of the total turnover.

The company’s overall margins for the quarter were 18%, while inbound orders were up 57% to 41,805 crore. While nearly 80% of L&T’s domestic orders come from the government, it expects private sector orders to pick up.

These orders are expected to come from healthcare, data centers, e-commerce logistics and warehousing and even airport projects. “Depending on who throws their hat in the ring, L&T can offer its engineering, procurement and construction capabilities,” Raman said.

L&T was keen to abandon the infrastructure projects it owns. It expects to complete the sale of eight road projects in its portfolio by the end of March, the company said in the earnings concall.

Q1FY23 Q1FY22
income ₹35,853 crore ₹29,334 crore
Net profit ₹1,702 crores ₹1,174 crores

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