Company has created additional liquidity by borrowing money in advance. Around Rs 4000-5000 crore of borrowings are due for repayment and management has kept money aside for the repayment.
Infrastructure major Larsen & Toubro on July 22 reported a consolidated net profit of Rs 303 crore for the quarter ended June 2020, registering a 79 percent decline year-on-year (YoY).
The company's consolidated gross revenue came in at Rs 21,260 crore for Q1FY21, registering a YoY decline of 28 percent. A CNBC-TV18 poll had estimated revenue to come at Rs 21,377 crore.
The company's EBITDA came at Rs 1,620.5 crore against the CNBC-TV18 poll of Rs 1,810 crore. The consolidated EBITDA margin came at 7.6 percent against the CNBC-TV18 poll of 9.1 percent.
Here are the highlights from Larsen & Toubro's Q1 FY21 earnings call, as compiled by Narnolia Financial Advisors
Management Participants: Mr. Arnob Mondal - VP Corporate Accounts & IR
Economic activity completely shut down in April and started improving in May and June. The company is witnessing early signs of pick up in ordering activity in domestic as well as International market for the infra projects but it will come back to normal once the situation is back to normalcy.
Company is seeing steady increase in availability of migrant labours and currently 1,90,000 labourers are on sites and around 1,500 new labourers added on daily basis but at higher cost. Company has clause to pass on increased in labour cost in some of the contracts.
Execution cannot be at normal level until the situation is back to normal despite the migrant labour back to construction site due to social distancing norms. Some of the sites are in urban area which is not started yet.
Lower commodity prices have helped at some extent to maintain margin. Currently 55% orders of the order book are pass through contract while 45% are fixed price contract.
Current order book is Rs 3.15 lakh crore and out of it 80% orders are from public sector including state and central government. Out of that 40% orders are multilateral agency funded, so there is no risk of lack of funds. Even state and Central government funded projects are also seeing early payments.
Company has created additional liquidity by borrowing money in advance. Around Rs 4000-5000 crore of borrowings are due for repayment and management has kept money aside for the repayment.
E&A deal is on but need to complete some portion of deal. This only completed in physical presence of both the parties. Hence both the company, L&T and Schneider is waiting for the international travel resumption. Once the international travel gets resume deal will be completed immediately.
Company’s bid pipeline is around Rs 5 lakh crore in domestic market. Water, Heavy Civil Infra/Engineering and Power T&D are the biggest area with opportunity size of Rs 1 lakh crore each and rest from the transportation, Smart world, Building and Factories and others.
Hyderabad Metro is still closed and fare revenue collection is zero in this quarter and reported negative operating margin. Hyderabad metro may require funds to support the projects. A current borrowing is Rs 15000 crore.
Due to lockdown, power requirement in Punjab from industrial units is also lower which led to lower PLF at Nabha. Though, the Nabha reported positive operating margin.