LARSEN & TOUBRO Analyst Presentation Q4/FY20 June 5, 2020 1 1
Disclaimer This presentation contains certain forward retain highly skilled professionals, time and cost looking statements concerning L&T’s future over runs on contracts, our ability to manage our business prospects and business profitability, international operations, government policies which are subject to a number of risks and and actions with respect to investments, fiscal uncertainties and the actual results could deficits, regulations, etc., interest and other materially differ from those in such forward fiscal costs generally prevailing in the economy. looking statements. Past performance may not be indicative of future performance. The risks and uncertainties relating to these statements include, but are not limited to, risks The company does not undertake to make any and uncertainties regarding fluctuations in announcement in case any of these forward earnings, our ability to manage growth, looking statements become materially incorrect competition (both domestic and international), in future or update any forward looking economic growth in India and the target statements made from time to time by or on countries for exports, ability to attract and behalf of the company. Engineering Manufacturing Construction Projects Technology Financial Services 2
Group Performance Highlights 01 Engineering Manufacturing Construction Projects Technology Financial Services 3
Performance Highlights – FY20 Order Inflow +9% Order Book PAT +4% +7% Revenue EBITDA +8% +7% Engineering Manufacturing Construction Projects Technology Financial Services 4
Key Financial Indicators (Amount in ₹ bn) Q4 FY19 Q4 FY20 % Var Particulars FY19 FY20 % Var 551 578 5% Order Inflow 1708 1864 9% Order Book 2908 3039 4% 433 442 2% Revenue 1352 1455 8% 53 51 (3%) EBITDA 153 163 7% 34 32 (6%) PAT 89 95 7% Net Working Capital 18.1% 23.7% RONW (TTM) (%) 15.3% 14.8% - Engineering Manufacturing Construction Projects Technology Financial Services 5
02 Group Performance Summary Engineering Manufacturing Construction Projects Technology Financial Services 6
Q4/FY20 Order Inflow/Order Book (Amount in ₹ bn) Order Inflow Order Book 4 % 5% 9 % Q4 FY20 617 FY20 750 1263 578 601 1864 413 165 2908 3039 Q4 FY19 FY19 2291 2289 1257 1708 451 551 378 173 FY19 FY20 Domestic International • Strong Domestic order inflows witnessed in Q4 • International order wins contribute to FY20 growth mainly driven by IT&TS segment, Power T&D and Metallurgical business • Portfolio diversity of the Order Book mitigates cyclicality Engineering Manufacturing Construction Projects Technology Financial Services 7
Group Performance – Sales & Costs Pandemic adversely affects Q4 • revenues. IT&TS smoothly Q4 Q4 transitions to WFH model % Var Rs Billion FY19 FY20 % Var FY19 FY20 MCO expense variation largely due • 433.0 442.5 2% Revenue 1352.2 1454.5 8% to higher proportion of IT&TS business and cost control initiatives 30% 32% International Rev. 32% 33% 300.2 286.7 -5% MCO Exp. 882.5 893.2 1% Fin charge opex largely represents • borrowing costs of FS business 19.7 19.4 -2% Fin. Charge Opex* 73.9 80.4 9% Staff cost increase on resource • 44.9 62.9 40% Staff Costs 174.7 231.1 32% augmentation in Service businesses 15.5 22.3 44% Sales & Admin. 67.9 86.5 27% & Mindtree consolidation 380.2 391.3 3% Total Opex 1198.9 1291.2 8% SG&A expenses mainly higher on • credit provisions in Fin. Serv * Finance cost of financial services business and finance lease activity business & Mindtree consolidation Engineering Manufacturing Construction Projects Technology Financial Services 8
Group Performance – Profit Stack Q4 Q4 % Var Rs Billion FY19 FY20 % Var Finance cost commensurate with FY19 FY20 • higher debt levels and phased 52.8 51.2 -3% EBITDA 153.3 163.3 7% commencement of Hyd. Metro (5.1) (8.2) 62% Fin. Cost (18.0) (28.0) 55% Higher depreciation charge on • account of Mindtree consolidation (4.4) (7.1) 63% Depreciation (19.2) (24.6) 28% & RoU Assets 6.1 6.6 8% Other Income 18.4 23.6 29% Other income reflective of level of • short term investments and higher (12.3) (9.7) -22% Tax Expense (39.6) (32.6) -18% yields (1.3) 1.5 JV/Associate PAT Share (0.2) 0.7 Share of JV/Associate PAT largely • comprises results of IDPL, Power (3.7) (3.7) -1% Non-controlling Int. (13.1) (13.5) 3% Eqpt. and Forgings JVs 2.0 1.3 Discontinued Operations 5.7 6.5 NCI variation largely due to • Mindtree consolidation, increase in 34.2 32.0 -6% Recurring PAT 87.1 95.5 10% LTI/LTTS share moderated by lower Fin.Serv profits - - Exceptionals 1.9 - E&A business classified as • 34.2 32.0 -6% Reported PAT 89.1 95.5 7% discontinued operations Engineering Manufacturing Construction Projects Technology Financial Services 9
Segment / Key Subsidiaries 03 Engineering Manufacturing Construction Projects Technology Financial Services 10
Segment Composition Heavy Defence Hydrocarbon Infrastructure Power Engineering Engineering Defence Onshore Buildings & Factories (B&F) EPC- Coal & Gas Process Plant Equipment Aerospace Transportation Infra (TI) Thermal Power Plant Nuclear Power Plant Offshore Shipbuilding Heavy Civil infra (HC) Construction Equipment Water & Effluent Treatment Electrostatic Piping Centre & Forgings * (WET) Precipitator Power T&D (PT&D) Power Equipment Metall. & Mat. Handling (MMH) Mfg. * Smart World & Comm.(SW&C) Electrical & Developmental Others Financial IT & TS Automation Projects Services Realty Electrical Standard Rural Lending Information Technology Roads / Trans. Line * Products Industrial Products & Technology Services Housing Finance Metros Machinery Electrical Systems Wholesale Finance Power & Equipment Asset Management Metering & Protection Control & Automation * Consolidated at PAT level E&A Segment is classified a discontinued operations and consolidated at PAT level Engineering Manufacturing Construction Projects Technology Financial Services 11
FY20 Order Inflow Composition ROW Others 7% 6% USA & Europe 11% Services Infrastructure 19% 55% Middle East 14% Hydrocarbon 11% Defence Engineering Domestic 1% 68% HE Power 1% 7% Order Inflow Rs 1864 Bn Engineering Manufacturing Construction Projects Technology Financial Services 12
FY20 Order Book Composition ROW Hydrocarbon Others USA & 10% 15% 2% Europe 1% Defence Engineering 3% Middle East HE 14% 1% Power 5% Domestic Infrastructure 75% 74% Order Book Rs 3039 Bn Engineering Manufacturing Construction Projects Technology Financial Services 13
FY20 Revenue Composition ROW 6% Others USA & Europe 7% 13% Infrastructure Services 50% 25% Middle East 14% Hydrocarbon 12% Domestic Defence 67% Engineering Power HE 3% 1% 2% Revenue Rs 1455 Bn Engineering Manufacturing Construction Projects Technology Financial Services 14
Infrastructure Segment (Amount in ₹ bn) -6 % 1 % Net Revenue Net Revenue 268.5 253.3 62.9 61.6 205.6 191.7 FY19 FY20 Q4 FY19 Q4 FY20 12.3% EBITDA Margin 11.1% 8.5% EBITDA Margin 8.1% Domestic International Strong domestic and international order inflows in Q4 – contributed by order wins in Solar • and water projects Muted revenues in Q4 reflective of execution challenges (slow moving orders, stoppage of • AP jobs, funding constraints and impact of Covid-19) Margins reflect stage of execution and job mix • Engineering Manufacturing Construction Projects Technology Financial Services 15
Power Segment (Amount in ₹ bn) -40 % -42 % Net Revenue Net Revenue 9.3 2.5 5.6 0.4 6.8 5.2 FY20 FY19 Q4 FY19 Q4 FY20 4.7% EBITDA Margin 38.3% 4.5% EBITDA Margin 12.0% Domestic International Strong order inflows in current year replenishes order book • Revenue decline reflects depleted opening order book and tapering of International jobs • Margins reflective of job mix, stage of execution and claims • Profits of MHPS and other JV companies are consolidated at PAT level under equity method • Engineering Manufacturing Construction Projects Technology Financial Services 16
Heavy Engineering Segment (Amount in ₹ bn) -17 % 31 % Net Revenue Net Revenue 7.7 6.4 4.1 3.6 3.6 2.8 FY20 FY19 Q4 FY19 Q4 FY20 24.5% EBITDA Margin 21.5% 22.8% EBITDA Margin 18.5% Domestic International Order Inflows in current year impacted by deferments • Strong revenues for the year driven by large opening Order Book, Q4 revenue • slowdown due to client delays and shutdown Global competence, technology differentiation, proven track record and cost • efficiencies yield strong margins. Q4 and full year margins impacted by cost provisions Engineering Manufacturing Construction Projects Technology Financial Services 17
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