L&T is riding on an order high

by October 2020, as one imagined the end of Covid, fears of an impending second wave started creeping in. engineering projects started getting delayed and construction orders began drying up. 

Larsen & Toubro (L&T), the country’s largest infrastructure company, was feeling the heat as well. its stock hit a 52-week low of Rs 1,079.35 per share in November 2020. A year later, the firm engineered a massive turnaround, winning multiple orders in water, metals, power, mining, and metro projects. 

this led to L&T hitting a 52-week high of Rs 1,982.95 per share on November 15.

so, what drove the growth?

in February 2021, L&T bagged an order to build India’s longest river bridge that would better connect the north-eastern states to the rest of India and neighboring countries. the company also saw its business pick up across categories. 

during the fourth quarter (Q4FY21), L&T saw a 3% YoY rise in consolidated net profit to Rs 3,293 crore. this was on the back of an 8% growth in its order book to Rs 3.3 lakh crore at the end of FY21. 

this trajectory continued. in the September quarter (Q2), it bagged orders worth Rs 42,140 crore. here, international orders made up 52% of the total order book. 

the worker numbers also grew by 81,000 to 2,51,000 in October 2021 over a five-month period. this will increase the execution speed of current projects and the ones in the pipeline.

the future drivers

apart from the domestic Engineering, Procurement and Construction (EPC) business, L&T is also betting big on the international markets. among these is the Middle East region, especially the UAE.

the Middle East constitutes 61% of the company’s international order book, where power transmission and distribution make up the bulk of the projects. 

considering the growth and the improved execution of orders, the company management, with cautious optimism, has projected a low to mid-teens revenue growth for FY22. in October again, the company earned orders for its construction arm. if this momentum continues, the future appears bright even as the pandemic-linked fears continue.