L&T’s lower guidance leaves no margin for error
order inflow growth at 31% year-on-year in FY24 was ahead of its 20% growth guidance. This provides robust execution visibility. While order inflows in the March quarter at Rs56,050 crore fell 8% year-on-year, led by a fall in domestic orders due to the ongoing elections, the order book at ₹4.8 trillion was at a record high.
A moderation in domestic order inflows due to the ongoing national election may also weigh on L&T’s performance in the first half of this financial year. But the prospective pipeline for FY25 is healthy and stands at ₹12.1 trillion, up 24% year-on-year. Based on this, L&T anticipates 10% order inflow growth in FY25.
However, its FY25 revenue growth guidance of 15% seems low given the FY24 orders. Further, the improvement in working capital situation aided by improved collections and better customer advances was a positive. This aided L&T’s return ratio profile.
In FY24, L&T was able to improve return on equity (RoE) by 270 bps to 14.9% as it reduced net working capital by 410 bps to 12% of sales. For FY25, L&T expects net working capital to sales at 15%. The management said the company will constantly focus on improving RoE by reducing working capital.
This will be driven by a better focus on overall collection improvement. Meanwhile, the management said that average ridership in the Hyderabad Metro project fell to 441,000 passengers a day in the March quarter from 444,000 passengers a day in the preceding third quarter. The drop was due to free bus travel introduced for women by the Telangana government.
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