Conference Call with L&T Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.
Key Highlights
Q4FY20 order inflow: Rs. 578 billion up 5% YoY, primarily due to domestic and infrastructure order inflows. Order inflows have grown despite a high base. Strong domestic and international order inflows in Q4 was contributed by wins in solar and water projects
Revenues for Q4 was at Rs. 442 billion, up 2%, despite covid19 and work from home. EBITDA and PAT was at Rs 51 billion and Rs 32 billion, declining 3% and 6% respectively, mainly due to execution challenges, and lockdown. We lost Rs 17.5 billion in revenues in Q4 due to COVID19.
Payments from the public space has not been encouraging. We had to support our vendor ecosystem as well in Q1FY20. We have been doing a balancing act between revenue and working capital for a couple of years now. However there has been no weakening in working capital. We have enough liquidity buffer in our balance sheet.
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
MCO expense variation largely due to higher proportion of IT&TS business and cost control initiatives
The finance charge opex largely represents borrowing costs of FS business. Staff cost increase due to resource augmentation in Service businesses and Mindtree consolidation.
In FY20 managed to secure almost same level of domestic orders as last year. International orders have rosen from 21% to 25% from FY19 to FY20. Each vertical has 9-15% of orders coming from international orders. Diversity of order book is also significant.
Overall, Rs 3,300 crore backlog in projects - very healthy backlog at the moment. Our numbers were mainly impacted by the lockdown. 90% of sites are back, but labourers only at 40%. All of our workshops have work till September 2021.
Much of the competition is under terrific strain, with significant debt and cash flow challenges on the books. So is there consolidation likely to happen in the industry? There have been some construction companies have approached us offering us to buy them out, but we have not been interested. They may consolidate among themselves. But what is likely to impact L&T is that going forward because of weaker competition, we may win more bids that we try for.