1QFY2017 Result Update | Infrastructure
August 3, 2016
Larsen & Toubro
ACCUMULATE
CMP
`1,504
Performance Highlights
Target Price
`1,700
Quarterly highlights - Standalone
Investment Period
12 Months
Y/E March (` cr)
1QFY17*
1QFY16*
% chg (yoy)
Gross sales
11,973
11,299
6.0
EBITDA
787
707
11.3
Stock Info
Adj. PAT
597
563
6.0
Sector
Infrastructure
Source: Company, Angel Research; *Reported as per Ind-AS
Market Cap (` cr)
104,496
Standalone numbers impress: For the quarter, L&T reported lower than expected,
Net debt (` cr)
11,927
6% yoy increase in its top-line to `11,973cr. Revenue growth on yoy basis reflects
59.7% increase in Power segment and 14.1% decrease in Others segment. L&T
Beta
1.4
reported 31bps EBITDA margin expansion to 6.6%. L&T reported Adj. PAT of
52 Week High / Low
1,844/1,017
`597cr, reflecting 5.0% margins, same as the year ago levels.
Avg. Daily Volume
2,242,115
Consolidated Order inflows grew 14.0% yoy to `21,874cr. Order backlog stands
Face Value (`)
2
at `2,57,427cr, thereby giving revenue visibility for next 10 quarters.
BSE Sensex
27,982
Roll-out of Ind-AS impacts profitability: Roll-out of Ind-AS, led L&T take ~`150cr
Nifty
8,623
of provisions towards exp. credit loss (ECL) and ~`100cr towards employee
performance linked incentives. These 2 impacted in addition to higher borrowing
Reuters Code
LART.BO
costs, re-classification of net actuarial gains, valuation of investments, impacted
Bloomberg Code
[email protected]
profitability. Provision for ECL is in addition to normal provisions undertaken. L&T
took `100cr inventory write-down and another `180cr towards foreseeable loss
in 1QFY17E. Considering the (1) strong operational performance (mainly in the
Shareholding Pattern (%)
Power, Heavy Eng, IT & Tech. Services, Infrastructure), (2) Order Inflow growth
Promoters
-
and strong bid pipeline, we expect L&T to have fair chance of attaining FY2017E
MF / Banks / Indian Fls
39.5
guidance on both, the revenue and margin side (even on new Ind-AS).
FII / NRIs / OCBs
17.0
Key Positives: Strong 14% yoy Order Inflows, Margin improvement, net WC cycle
maintained at 23.5% of sales.
Indian Public / Others
43.5
Key Negatives: Below than expected revenues for the quarter.
Abs. (%)
3m
1yr
3yr
Outlook and valuation: L&T’s diversified presence and an anticipated recovery in
the capex cycle coupled with the company’s strong balance sheet comfort us that
Sensex
8.9
(0.4)
45.9
it is well positioned to benefit from revival in the award activity environment. With
LT
16.2
(17.2)
84.8
order backlog expected to grow, execution should pick-up gradually. We have
valued L&T using sum-of-the-parts (SoTP) methodology, to capture the value of
all its businesses and investments. Ascribing separate values to its parent business
3-year price chart
(on P/E basis) and investments in subsidiaries (using P/E, P/BV and M-cap basis),
2,000
we arrive at FY2017E based target price of `1,700. We are of the view that L&T
1,500
is good proxy play for investors wanting to ride on the revival of Indian Infra
growth story. Given the 13.0% upside, we maintain ACCUMULATE on the stock.
1,000
500
Key financials (Standalone)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
0
Net Sales
51,611
56,599
57,017
59,780
67,665
77,249
% chg
9.7
0.7
4.8
13.2
14.2
Net Profit
4,385
5,493
5,056
4,191
5,380
6,399
% chg
25.3
(8.0)
(17.1)
28.4
19.0
Source: Company, Angel Research
EBITDA (%)
10.6
11.8
11.4
10.3
10.7
11.0
EPS (`)
53
59
54
57
57
68
P/E (x)
28.4
25.5
27.8
26.6
26.3
22.1
P/BV (x)
3.2
3.0
2.8
2.6
2.4
2.3
RoE (%)
14.2
15.6
13.3
15.1
12.6
13.7
RoCE (%)
17.5
18.7
16.3
14.5
15.6
17.0
Yellapu Santosh
EV/Sales (x)
2.6
2.6
2.7
2.5
2.2
1.9
022 - 3935 7800 Ext: 6811
EV/EBITDA (x)
24.3
22.3
23.3
24.6
21.0
17.8
[email protected]
Source: Company, Angel Research; Note: CMP as of August 2, 2016;* L&T has reported its
1QFY2016/17 numbers on Ind-AS
Please refer to important disclosures at the end of this report
1
Larsen & Toubro | 1QFY2017 Result Update
Exhibit 1: Quarterly Performance (Standalone)
Particulars (` cr)
1QFY17*
1QFY16*
% chg (yoy)
Gross Sales
12,150
11,444
6.2
Total Expenditure
11,186
10,592
5.6
Operating Expenses
9,244
8,842
4.5
Employee benefits Expense
1,290
1,145
12.6
Sales, Admin & Other Expenses
652
605
7.8
EBITDA
964
852
13.2
EBIDTA %
7.9
7.4
Depreciation
279
269
3.9
EBIT
685
583
17.5
Interest and Financial Charges
331
315
5.0
Other Income
483
522
(7.6)
PBT before Exceptional Items
836
790
5.9
Exceptional Items
50
0
PBT after Exceptional Items
786
790
(0.4)
Tax
240
226
5.9
% of PBT
30.5
28.7
PAT
547
563
(2.9)
Other Comprehensive Income
(46)
(8)
Total Comprehensive Income
500
556
(9.9)
Adj. PAT (for excep. Items)
597
563
6.0
Adj. PAT %
5.0
5.0
Dil. EPS
5.85
6.02
(2.8)
Source: Company, Angel Research; *Reported as per Ind AS, #FY16 numbers & other remaining
quarters continue to be reported as per Indian GAAP; It needs to be noted that yoy growth for
FY2017E/FY2016 is not comparable as FY2016 continues to be reported under Indian GAAP
Standalone business
Revenues grew 6.0% yoy
L&T reported 6.0% yoy increase in its top-line to `11,973cr, reflecting (1) 3.0%
increase in Infrastructure (66.5% of Income), (2) 59.7% increase in Power (14.2%
of Income), and (3) 14.1% decline in Other’s segment (8.9% of Income).
Exhibit 2: Segment-wise Segmental Income (Standalone)
Particulars (` cr)
1QFY17
1QFY16
% chg (yoy)
Infrastructure
8,074
7,839
3.0
Power
1,723
1,079
59.7
Heavy Engineering
675
600
12.4
Electrical & Automation
844
847
(0.5)
Others
1,086
1,264
(14.1)
Less: Inter-segment Revenues
250
186
34.4
Net Segmental Income
12,150
11,444
6.2
Source: Company, Angel Research; *Reported as per Ind AS, FY2016 numbers & other quarters
continue to be reported as per Indian GAAP
Notably, MM&H segment (earlier reported separately till 4QFY2016) in 1QFY2017
has been clubbed with Other’s segment.
August 3, 2016
2
Larsen & Toubro | 1QFY2017 Result Update
Exhibit 3: Segment-wise Unadj. EBIT & EBIT Margins (Standalone)
Particulars (` cr)
1QFY17*
1QFY16*
% chg (yoy)
Infrastructure
614
589
4.2
EBIT Margin (%)
7.6
7.5
Power
89
(8)
NM
EBIT Margin (%)
5.2
(0.8)
Heavy Engineering
70
35
101.4
EBIT Margin (%)
10.4
5.8
Electrical & Automation
78
64
23.3
EBIT Margin (%)
9.3
7.5
Others
(3.3)
42
NM
EBIT Margin (%)
(0.3)
3.3
Net Segmental EBIT (unadj.)
849
721
17.6
Source: Company, Angel Research; NM- Not Meaningful; *Reported as per Ind AS, FY2016
numbers & other quarters continue to be reported as per Indian GAAP
Reports 6.6% EBITDA margins
L&T reported 31bps yoy improvement in its EBITDA margin to 6.6% in 1QFY2017.
A restricted 4.5% yoy increase in Operating expenses (to `787cr), lower than the
1QFY2017 top-line growth, helped L&T report yoy EBITDA margin expansion.
EBIT level turn-around in Power segment (5.2% EBIT margins in 1QFY2017 vs.
negative 0.8% in 1QFY2016), was negated by Other’s segment margin, which
turned red (reported negative 0.3% margins in 1QFY2017 vs 3.3% in 1QFY2016).
Exhibit 4: EBITDA margin at 6.6%
Exhibit 5: Adj. PAT margin flat at 12.4%
3,500
16.0
3,000
14.0
15.2
11.7
12.4
13.1
3,000
14.0
12.0
2,500
9.9
12.0
2,500
10.0
2,000
10.0
2,000
7.6
8.0
6.8
8.0
1,500
6.3
5.4
1,500
6.6
5.0
5.0
6.0
6.0
1,000
1,000
4.0
4.0
500
500
2.0
2.0
0
0.0
0
0.0
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
EBITDA (`cr, LHS)
EBITDAM (%, RHS)
Adj. PAT (` cr, LHS)
Adj. PATM (%, RHS)
Source: Company, Angel Research; 1QFY2016 & 1QFY2017 numbers
Source: Company, Angel Research; 1QFY2016 & 1QFY2017 numbers
reported as per Ind AS, FY2016 numbers & other quarters continue to be
reported as per Ind AS, FY2016 numbers & other quarters continue to be
reported as per Indian GAAP
reported as per Indian
Adj. PAT numbers report strong yoy growth
L&T for 1QFY2017 reported a PAT of `547cr. On adjusting for provision for
impairment of investment in subsidiary company (`50cr), Adjusted PAT stood at
`597cr. Despite 11.3% yoy increase in EBITDA, increase in tax rate (from 28.7% a
year ago to 30.5% in 1QFY2017) and 1.0% decrease in other income (to `660cr),
led to 6.0% yoy increase in Adj. PAT. Adj. PAT margin of the company stood flat on
yoy basis at 5.0%.
August 3, 2016
3
Larsen & Toubro | 1QFY2017 Result Update
Hydro-Carbon business out of the woods…
Hydro-Carbons business reported 0.7% yoy increase in revenues to `2,135cr,
reflecting delays in Order Book replenishment. EBIT was down 22.1% owing to
provision of closure cost related to one last legacy project.
Exhibit 6: Hydro-Carbon- Quarterly Revenues & EBIT
3,000
100
39
50
2,500
12
9
(2)
0
2,000
(50)
1,500
(92)
(100)
1,000
(137)
(150)
500
(209)
(200)
0
(250)
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
Revenue (` cr, LHS)
EBIT (` cr, RHS)
Source: Company, Angel Research; 1QFY2016 & 1QFY2017 numbers are reported as per Ind AS,
Other quarter numbers continue to be reported as per Indian GAAP.
IT & Technology Services business report strong growth
L&T’s IT & Technology Services business reported strong 15.1% yoy increase in
revenue for the quarter to `2,375cr. Top-line growth was driven by sectors, like
Insurance, Auto & Aero, Transportation and Industrial Products. On the operating
front, EBIT margins expanded by 365bp yoy to 19.2%, on the back of favourable
exchange rate and operational efficiencies.
Consolidated Business Performance
Revenue grew 9.3% yoy
L&T reported 9.3% yoy growth in its consolidated business’ top-line to `21,719cr.
Revenue growth on yoy basis, reflects (1) strong execution across Infrastructure
segment (9% revenue growth to `9,288cr), (2) projects under execution achieving
substantial progress at Power segment (59.7% increase in revenue to `1,723cr),
and (3) 13.9% increase in Heavy Engineering segment to `734cr.
Infrastructure segment (42.5% of consol. Income) benefitted from the execution of
Civil Infra, Transportation, Power T&D & Water & Effluent treatment projects.
Revenues from the Buildings & factories sub-vertical was flat on yoy basis. Growth
in yoy International revenues is on account of strong execution seen across Riyadh
& Doha Metro projects.
Strong yoy growth across Power segment was on the back of improved execution
of both, the Domestic and International projects (strong execution was across the 2
gas based Bangladesh power projects won in FY2016).
August 3, 2016
4
Larsen & Toubro | 1QFY2017 Result Update
Development Projects reported 17.0% yoy increase in revenues to `1,154cr, owing
to 90% PLF seen across their Nabha Power plant and commencement of 2 BOT
road projects. Revenue from this segment also includes contract revenues/profits
from 3rd party contracts (non L&T related) related to the Hyderabad Metro project.
Exhibit 7: Quarterly Performance (Consolidated)
Particulars (` cr)
1QFY17* 1QFY16*
% chg (yoy)
Gross Sales
21,719
19,866
9.3
Total Expenditure
19,969
18,407
8.5
Man. Cons. & Opex Exp. (MCO)
14,975
13,901
7.7
Employee benefits Expense
3,420
3,149
8.6
Sales, Admin & Other Expenses
1,574
1,357
16.0
EBITDA
1,750
1,459
20.0
EBIDTA %
8.1
7.3
Depreciation
465
466
(0.2)
EBIT
1,285
993
29.4
Interest and Financial Charges
337
389
(13.3)
Other Income
458
466
(1.8)
PBT before Exceptional Items
1,405
1,069
31.4
Exceptional Items
0
0
PBT after Exceptional Items
1,405
1,069
31.4
Tax
549
428
28.2
% of PBT
39.1
40.1
PAT before Minority Int.
856
641
33.6
Share in profit of Associates (net)
(174)
(196)
Adj. of Minority Interests
(73)
(26)
Other Comprehensive Income
(116)
(6)
PAT
494
413
19.6
Adj. PAT (for excep. Items)
494
413
19.6
Adj. PAT %
2.3
2.1
Dil. EPS
6.52
4.48
45.5
Source: Company, Angel Research; 1QFY2016 & 1QFY2017 numbers are reported as per Ind
AS, FY2016 numbers & other quarters continue to be reported as per Indian GAAP.
EBITDA margin expands yoy to 8.1%
L&T reported 71bp yoy EBITDA margins expansion in 1QFY2017 to 8.1%. Surge in
margins is owing to restricted (1) 7.7% increase in Man. Cons. & Opex Exp. (MCO)
to `14,975cr and (2) 8.6% increase in Employee expenses to `3,420cr. Surge in
employee expenses is on account of manpower augmentation and higher staff mix
from International operations. Sales Administration & Other (SAO) expenses
increased 16% yoy owing to higher provisions for NPAs and Other receivables.
Further, if we look at segment-wise details, then yoy EBIT margins benefitted from
expansion of segment margins across Heavy Engineering (542bps; as certain cost
provisions incurred in 1QFY2016 were not seen in 1QFY2017), Power (595bps)
and IT & Technology Services (365bps). Benefits of margin expansion across
segments was negated up to certain extent by sharp EBIT level loss margins seen
across Others segment (4% in 1QFY2017 vs 7.3% in 1QFY2016).
August 3, 2016
5
Larsen & Toubro | 1QFY2017 Result Update
The 325bps yoy EBIT margin improvement at Developmental Projects segment is
on account of earnings from Kattupalli port operator. Margin benefits were
negated by `100cr provision towards Shipbuilding segment inventory write-downs
(Arbitration proceedings are ongoing in Singapore).
Adj. PAT margin expands marginally to 7.3%
L&T reported PAT (before Other Comprehensive Income) of `610cr, up 46% yoy in
the restated numbers. Similarly, PAT after OCI stood at `494cr in 1QFY2017, up
20% yoy. Core business PAT margins were at 2.8%, better than the previous year’s
2.1%.
High provisioning in restated 1QFY2016 numbers was key reasons for fall in the
1QFY2016 PAT numbers from `606cr under IGAAP to `419cr under Ind-AS. As
per Ind-AS guidelines, L&T has started recognizing provisions for: Expected Credit
Loss (ECL). This provision includes (1) provision for actual credit losses, where
recovery is unfeasible and (2) on account of receivables bucket ageing (time value
of delayed collections). L&T recognized ECL provision of `169cr in 1QFY2016.
This is in addition to `1,000cr hit taken at FY2016 opening balance sheet. L&T
management highlighted that 1QFY2017 ECL provisions were at `170cr. Provision
for employee benefits based on constructive obligations. L&T provided for `99cr in
1QFY2016 on account of employee benefits based on constructive obligations and
a similar amount is provisioned in 1QFY2017 as well.
Exhibit 8: Reconciliation of net PAT under IND-AS and IND-GAAP
Particulars (` cr)
Adj.
1QFY2016
Net Profit as per previous IGAAP
606
Prov. for expected credit losses
(169)
Prov. for employee benefits based on constructive
(99)
obligations
Gain on fair value of investments
62
Inc. in borrowing cost pursuant to application of
(12)
Effective Interest rate method
Reclassification of net actuarial gain on employee
defined benefit obligations to other comprehensive
(20)
income
Increase in borrowings cost due to initial fair
(39)
valuation of long-term financials liabilities
Others
14
Deferred & Current taxes in respect of above adj.
75
(187)
PAT before Other Comprehensive Inc. as per IND AS
419
Source: Company, Angel Research
Order inflow growth in-line with our expectation…
Consolidated order inflow for the quarter grew 14.0% yoy to `29,702cr. Majority
of 1QFY2017 Orders won were from the domestic Infrastructure and International
Hydro-Carbon segment.
August 3, 2016
6
Larsen & Toubro | 1QFY2017 Result Update
Exhibit 9: 1QFY17 Order Inflows mix (consol.)
Exhibit 10: 1QFY17 Order Book mix (consol.)
Others, 5%
Services, 0%
Hydrocarbon,
EA, 4%
Others, 7%
8%
EA, 1%
HE, 4%
Power, 7%
HE, 3%
Services, 19%
Infrastructure,
Hydrocarbon,
40%
27%
Infrastructure,
74%
Power, 1%
Source: Company, Angel Research
Source: Company, Angel Research
L&T’s order book currently stands at `2,57,427cr, indicating 8% yoy growth. As of
1QFY2017, L&T’s order book is majorly dominated by Infra (74%), followed by
Hydro-carbon (8%) and Power (7%) segments. International order book constitutes
29% of total order book. The current order book gives revenue visibility for over
the next 10 quarters.
Management has maintained its 15% Order Inflow guidance for FY2017E, on the
back of strong pipeline of projects coming-up for awarding. L&T management
claims that ~`425,000cr of projects would come up for awarding in FY2017E.
Key Concall Takeaways
As per New Ind-AS, FY2016 consolidated revenues (ex-services business) and
EBITDA margins would be close to `1,00,000cr and ~9.5% (vs 9.9% under
Ind-GAAP), respectively. Decline in FY2016 EBITDA margins is owing to Prov.
For Expected Credit Loss (ECL).
Post roll out of new Ind-AS, L&T has maintained its 10-15% revenue guidance
and 50bps EBITDA margin swing.
ECL for 1QFY17 at `170cr is same as in 1QFY16. This includes expectation
of ageing assets, credit loss of new receivables added during the quarter. In
addition to this ECL created for the receivables at FY2016-end is ~`1,000cr
(taken through reserves in balance sheet). Notably, cost provisions account
has grown by an additional `170cr in 1QF2017 (shown as charge in Selling
& Administrative expenses).
Some of the key JVs are not contributing to Consolidated (ex services) PAT, it
includes (1) Mitsubishi-Hitachi Power Systems JV, earlier accounted in Power
business,
(2) Road SPV’s reported under IDPL,
(3) Forgings JV earlier
accounted in Heavy Engineering business (as NPCIL with 26% stake has
participatory rights),
(3) L&T Sapura earlier accounted in Hydrocarbon
segment, and (4) other 50:50 JVs.
As per Ind-AS, Order wins by JVs would contribute in proportion to stake held
by L&T in the JV.
Working capital levels at 1QFY2017-end is same as in 1QFY2016 levels at
23.5% of sales (based on reclassified numbers).
August 3, 2016
7
Larsen & Toubro | 1QFY2017 Result Update
Valuation
We maintain ACCUMULATE with target price of `1,700
We have valued the company using sum-of-the-parts (SOTP) methodology to
capture the value of all its businesses and investments. Ascribing separate values to
its parent business on a P/E basis and investments in subsidiaries (using P/E, P/BV
and M-cap basis), we arrive at a FY2017E target price of `1,700. At the current
market price of `1,504, the standalone entity is trading at an implied P/E multiple
of 12.7x, which is attractive. We are of the view that L&T is proxy play for investors
wanting to play on the revival in the Indian infrastructure growth story. Given the
13% upside, we maintain ACCUMULATE rating on the stock.
Exhibit 11: Derivation of SOTP-based target price for L&T (FY2017E)
Business Segment
Methodology
Remarks
` cr
`/share
% to TP
L&T- Parent
P/E
15.0x FY2018E Earnings
100,276
1,061
62.4
Infrastructure Subsidiaries
IDPL
P/BV
1.5x FY2017E BV
11,431
121
7.1
Key Subsidiaries - Services
L&T InfoTech
P/E
15.0x FY2017E Earnings
27,127
287
16.9
L&T Finance
M-cap Basis
20% holding company discount
6,973
74
4.3
Realty Space
L&T Realty (inc. Seawoods Realty)
P/BV
1.0x FY2017E BV
4,000
43
2.5
Hydro-Carbons Business
Hydro-Carbons
P/BV
1.5x FY2017E BV
2,100
22
1.3
Key Subsidiaries - Manufacturing
L&T Power-equipment JVs
P/BV
1.0x FY2017E BV
700
7
0.4
Other Associate Companies
P/BV
1.0x FY2017E BV
5,500
59
3.5
International Business
International Subsidiaries
P/BV
1.5x FY2017E BV
2,400
26
1.5
Grand Total
160,507
1,700
100
Upside
13.0%
CMP
1,504
Source: Company, Angel Research
Investment arguments
Indian capex recovery is a matter of time: Regular announcements on the
policy front eases environment for capex revival. This along with ongoing rate
cuts makes us believe that recovery is very much on cards. Considering that
the awarding activity revival should further pick-up, we see better visibility on
recovery to be seen from 2HFY2017E onwards. Further we expect
improvement in L&T's execution, margin expansion from FY2017E onwards.
Uptick in the domestic Order Inflow environment should lead to shift in order
inflow mix more towards the domestic markets, going forward. On the back of
shift in order book towards domestic markets, we expect uptick in execution.
Accordingly, we have modeled a 13.7% top-line CAGR over FY2016-2018E.
Given that L&T’s current Order Book gives revenue visibility for 10+ quarters,
considering shift in order inflow mix, L&T would see faster margin recovery.
August 3, 2016
8
Larsen & Toubro | 1QFY2017 Result Update
We expect EBITDA margins to expand from 10.3% in FY2016 to 11.0% in
FY2018E.
Best stock to play the Indian infrastructure theme: We are of the view that L&T
is very well positioned to benefit from gradual recovery in the domestic capex
cycle, given its diverse range of sectoral exposure, strong balance sheet and
better cash flow generating potential in comparison to its peers, which are
struggling with higher leverage, and strained cash flows.
Company background
L&T, the largest Indian infrastructure conglomerate, is present across almost all the
infrastructure segments and is at the forefront of the Indian infra growth story.
Over the years, the company has diversified across various segments to encash the
untapped infra opportunity, not only in India but in other geographies as well, and
has an excellent track record of achieving the same. Currently, L&T manufactures
and services its business in over 30 countries worldwide.
August 3, 2016
9
Larsen & Toubro | 1QFY2017 Result Update
Profit & loss statement (Standalone)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
Net Sales
51,611
56,599
57,017
59,780
67,665
77,249
% Chg
9.7
0.7
4.8
13.2
14.2
Total Expenditure
46,138
49,932
50,530
53,609
60,459
68,790
RM & Contracting Exp.
40,205
43,346
44,397
46,629
52,610
60,023
Employee benefits Expense
3,861
4,662
4,151
4,480
5,075
5,794
Sales, Admin. & Other Exp.
2,072
1,923
1,982
2,500
2,774
2,974
EBITDA
5,473
6,667
6,488
6,171
7,206
8,459
% Chg
22
(3)
(5)
17
17
EBIDTA %
10.6
11.8
11.4
10.3
10.7
11.0
Depreciation
728
792
1,008
999
1,035
1,078
EBIT
4,745
5,875
5,480
5,172
6,171
7,381
% Chg
23.8
(6.7)
(5.6)
19.3
19.6
Int. and Financial Charges
955
1,076
1,419
1,449
1,508
1,531
Other Income
1,887
1,881
2,283
2,406
2,607
2,798
PBT
5,678
6,679
6,344
6,129
7,270
8,648
Exceptional Item
(176)
(589)
(357)
560
0
0
PBT after Exceptional Item
5,854
7,268
6,701
5,569
7,270
8,648
Tax Expenses
1,541
1,775
1,645
1,378
1,890
2,248
% of PBT
27.1
26.6
25.9
22.5
26.0
26.0
PAT before Extra-Ordinary Items
4,313
5,493
5,056
4,191
5,380
6,399
Extra-Ordinary Item
(72)
0
0
0
0
0
Rep. PAT
4,385
5,493
5,056
4,191
5,380
6,399
% Chg
25.3
(8.0)
(17.1)
28.4
19.0
PAT %
8.5
9.7
8.9
7.0
8.0
8.3
Diluted EPS (after Extra-ord. Items)
53
59
54
57
57
68
% Chg
11.6
(8.3)
4.6
1.3
19.0
Note: 1QFY2016 & 1QFY2017 numbers are reported as per Ind AS, FY2016 numbers & other
quarters continue to be reported as per Indian GAAP.
August 3, 2016
10
Larsen & Toubro | 1QFY2017 Result Update
Balance Sheet (Standalone)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E FY18E
Sources of Funds
Equity Capital
123
185
186
186
186
186
Reserves Total
29,020
33,476
36,899
40,532
44,162
48,781
Networth
29,143
33,662
37,085
40,718
44,348
48,967
Total Debt
8,834
11,459
12,937
13,608
13,700
12,500
Other Long-term Liabilities
788
393
470
523
569
611
Deferred Tax Liability
242
410
363
203
203
203
Total Liabilities
39,007
45,924
50,854
55,053
58,820
62,282
Application of Funds
Gross Block
11,855
11,397
12,604
13,461
14,511
15,631
Accumulated Depreciation
3,550
3,836
4,844
5,843
6,878
7,956
Net Block
8,305
7,561
7,760
7,619
7,634
7,676
Capital WIP
597
676
222
50
60
65
Investments
16,103
19,215
23,053
24,569
25,359
27,439
Current Assets
47,419
50,853
55,869
64,832
65,628
68,655
Inventories
2,064
1,983
2,208
1,888
2,275
2,355
Sundry Debtors
22,613
21,539
23,051
26,309
25,000
25,500
Cash and Bank Balance
1,456
1,783
1,516
1,681
1,797
2,063
Loans & Advances
9,413
10,067
10,533
13,237
14,279
15,450
Other Current Asset
11,873
15,481
18,562
21,717
22,277
23,287
Current Liabilities
33,417
32,381
36,050
42,017
39,860
41,553
Net Current Assets
14,002
18,472
19,820
22,815
25,768
27,102
Total Assets
39,007
45,924
50,854
55,053
58,820
62,282
Note: 1QFY2016 & 1QFY2017 numbers are reported as per Ind AS, FY2016 numbers & other
quarters continue to be reported as per Indian GAAP.
August 3, 2016
11
Larsen & Toubro | 1QFY2017 Result Update
Cash Flow Statement (Standalone)
Y/E March (` cr)
FY13
FY14
FY15
FY16 FY17E
FY18E
Profit before tax
5,678
6,679
6,344
6,129
7,270
8,648
Depreciation
728
792
1,008
999
1,035
1,078
Change in Working Capital
(3,703)
(5,029)
(1,579)
(3,730)
(3,748)
(1,986)
Net Int. & Financial Charg.
422
581
909
929
973
996
Direct taxes paid
(1,653)
(1,977)
(1,645)
(1,378)
(1,890)
(2,248)
Cash Flow from Operations
1,472
1,047
5,037
2,949
3,640
6,487
(Inc)/ Dec in Fixed Assets
(1,000)
(962)
(1,655)
(1,030)
(1,040)
(1,115)
(Inc)/ Dec in Investments
1,657
(252)
(2,345)
508
528
(780)
Cash Flow from Investing
657
(1,214)
(3,999)
(521)
(512)
(1,895)
Issue/ (Buy Back) of Equity
163
144
0
0
0
0
Inc./ (Dec.) in Loans
(1,515)
2,612
1,478
672
92
(1,200)
Dividend Paid (Incl. Tax)
(1,115)
(1,227)
(1,375)
(1,485)
(1,595)
(1,595)
Interest Expenses
(850)
(1,025)
(1,419)
(1,449)
(1,508)
(1,531)
Cash Flow from Financing
(3,316)
504
(1,316)
(2,262)
(3,012)
(4,326)
Inc./(Dec.) in Cash (inc. of
(410)
337
(278)
165
116
266
Disc. Operat.)
Opening Cash balances
1,906
1,496
1,794
1,516
1,681
1,797
Closing Cash balances
1,496
1,794
1,516
1,681
1,797
2,063
Note: 1QFY2016 & 1QFY2017 numbers are reported as per Ind AS, FY2016 numbers & other
quarters continue to be reported as per Indian GAAP.
August 3, 2016
12
Larsen & Toubro | 1QFY2017 Result Update
Key Ratios (Standalone)
Y/E March
FY13
FY14
FY15
FY16
FY17E
FY18E
Valuation Ratio (x)
P/E (on FDEPS)
28.4
25.5
27.8
26.6
26.3
22.1
P/CEPS
25.1
22.3
23.3
22.4
22.0
18.9
Dividend yield (%)
0.8
0.8
0.9
1.0
1.0
1.0
EV/Sales
2.6
2.6
2.7
2.5
2.2
1.9
EV/EBITDA
24.3
22.3
23.3
24.6
21.0
17.8
EV / Total Assets
3.4
3.2
3.0
2.8
2.6
2.4
Per Share Data (`)
EPS (fully diluted)
52.9
59.0
54.1
56.6
57.3
68.1
Cash EPS
59.9
67.5
64.6
67.2
68.3
79.6
DPS
12.0
12.3
13.3
14.4
15.4
15.4
Book Value
464
493
542
586
626
663
Returns (%)
RoCE (Pre-tax)
17.5
18.7
16.3
14.5
15.6
17.0
Angel RoIC (Pre-tax)
17.5
17.2
15.5
13.9
15.1
16.6
RoE
14.2
15.6
13.3
15.1
12.6
13.7
Turnover ratios (x)
Asset Turnover (Gross Block) (X)
4.4
4.9
4.8
4.6
4.8
5.1
Inventory / Sales (days)
15
13
13
13
11
11
Receivables (days)
160
142
143
151
138
119
Payables (days)
134
122
127
139
129
111
Leverage Ratios (x)
D/E ratio (x)
0.3
0.3
0.3
0.3
0.3
0.3
Interest Coverage Ratio (x)
6.9
7.2
5.5
5.2
5.8
6.6
Note: 1QFY2016 & 1QFY2017 numbers are reported as per Ind AS, FY2016 numbers & other
quarters continue to be reported as per Indian GAAP.
August 3, 2016
13
Larsen & Toubro | 1QFY2017 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Larsen & Toubro
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
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Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
August 3, 2016
14