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Larsen & Toubro (L&T), India's leading engineering and infrastructure conglomerate, announced record-breaking order inflows for the third fiscal quarter (Q3) ending December 31st. The company's new orders totaled a staggering ₹1.16 trillion (approximately $140 billion USD), a remarkable 53% increase compared to the same period in the previous year. This surge in orders propelled L&T's overall order book to an unprecedented ₹5.64 trillion, representing a 20% increase since the beginning of the fiscal year. This phenomenal growth underscores the robust demand for infrastructure projects both domestically and internationally, solidifying L&T's position as a market leader.
A significant portion of these new orders, over 50%, originated from overseas markets, primarily the Middle East. This region is experiencing a boom in mega-projects as governments actively diversify their economies away from oil dependence. The Middle East's ambitious infrastructure development plans, encompassing both physical and digital infrastructure, present substantial opportunities for L&T. The company's chairman and managing director, S.N. Subrahmanyan, expressed confidence in the continued growth potential of the Middle East market and L&T's ability to capitalize on emerging opportunities within this dynamic environment. The company's strategic focus on leveraging its strengths and maintaining resilience in a competitive landscape is crucial for sustaining this momentum.
Domestic order inflows also contributed significantly to L&T's Q3 success, more than doubling year-on-year to ₹53,900 crore. A substantial ₹23,000-crore order from NTPC Ltd, a major state-owned power company, played a key role in this surge. This demonstrates the growing demand for infrastructure development within India, driven by government initiatives. R. Shankar Raman, L&T's president, whole-time director, and CFO, expressed optimism regarding the continuing growth trajectory of domestic orders, particularly with the completion of the Lok Sabha elections and the anticipated revival of central government-led infrastructure projects. The increased domestic orders helped to balance the company's order book, which previously showed a stronger reliance on international projects.
The remarkable financial performance of L&T during Q3 extended beyond order inflows. The company's consolidated revenue for the quarter exceeded that of Tata Consultancy Services (TCS), India's largest IT services firm, a significant milestone. L&T reported a consolidated topline of ₹64,668 crore, a 17% increase year-on-year, while TCS reported ₹63,973 crore, representing a smaller growth of just under 6%. This achievement highlights L&T's diversification and strength across various sectors, contrasting with TCS’s focus solely on IT services. Furthermore, L&T's consolidated profit surged by 14% to ₹3,359 crore, demonstrating robust profitability despite a slight margin reduction.
While L&T experienced overall strong growth, the earnings before interest, tax, depreciation, and amortization (EBITDA) margin narrowed by 77 basis points to 9.67%. This reduction was primarily attributed to a slowdown in the company's IT business, comprising two listed subsidiaries, LTIMindtre and L&T Technology Services. These subsidiaries, heavily reliant on overseas revenue, faced challenges due to the ongoing technological transition and subsequent adjustments in business models within the IT industry. Despite these temporary setbacks, the management expressed confidence in the ability of both companies to adapt and maintain their market relevance by effectively responding to evolving customer needs in the global landscape.
Analysts have responded positively to L&T's Q3 results, particularly highlighting the record-breaking order inflow as a strong indicator of robust demand across key sectors, including power, renewables, and hydrocarbons. The securing of a project to build Uzbekistan's first AI-enabled data center further emphasizes L&T's strategic expansion into the digital and artificial intelligence space. This project holds significant potential to open doors for similar high-value projects in global markets, showcasing L&T's commitment to technological innovation and diversification.
In conclusion, L&T's Q3 performance represents a significant achievement, showcasing exceptional growth driven by a surge in orders from both the Middle East and domestic markets. The company's diversified portfolio, strong financial results, and strategic expansion into emerging technologies position it favorably for continued success in the coming quarters. While challenges remain, particularly within the IT sector, L&T's robust performance and positive outlook suggest a promising future for this key player in the global infrastructure and technology landscape. The company’s ability to navigate technological shifts and capitalize on international opportunities, coupled with a strong domestic presence, establishes L&T as a major force in shaping the future of infrastructure development worldwide.
Source: L&T hits record order inflows in Q3, fueled by Middle East, domestic growth