I'd like to believe Rupee will be in a depreciating mode rather than appreciating, says L&T CFO

Jul 27, 2022, 11:00 IST

L&T

R Shankar Raman, the CFO of the company said that they will vie to achieve 15% growth in revenues for FY23 as guided at the start of the year.
L&T, which gets around 80% of its orders from the government, hopes that private sector capex will pick up this year.
It expects to complete the sale of eight road projects in its portfolio by the end of March.

Infrastructure major Larsen and Toubro today reported a 45% growth in net profit to ₹1,702 crore in the first quarter of 2022-23 from ₹1,174 crore in the comparable quarter last year – in spite of it being a seasonally weak quarter.

Its revenues too moved up by 22%, however, the company is not revising its revenue forecast for the year from 12-15% given earlier.

“We are relieved,” said R Shankar Raman, the CFO of the company in an earnings concall on the first quarter performance, and also assured that they will try to shoot for the upper end of the band they guided, but refuse to go any further due to domestic and international events.

“There could be monkeypox or any other Black Swan incident and we do not know what shape it will come in. There are too many moving pieces to be able to predict but if the commodity prices remain soft some of the effects of the macroeconomic situation might be reversed,” said Raman.

As much as 37% of L&T’s revenues came from international markets, however, they said they have hedged to the extent of 70% on their receivables. “We are hedged to the extent of 70% but I would like to believe that the rupee will be in a depreciating mode rather than appreciating. The markets that we export to may see some impact,” Raman said.

The company did face execution headwinds during the quarter especially with its international orders like supply chain issues, procurement rescheduling due to high commodity costs, higher ancillary costs like power, freight, fuel and more. Its international business constitutes 37% of its total revenues.

The company’s overall margins for the quarter stood at 18%, while its order inflows went up by 57% to ₹41,805 crore. While almost 80% of L&T’s domestic orders are from the government, it expects private sector orders to pick up.

These orders are expected to come from healthcare, data centers, e-commerce logistics and warehousing and even airport projects. “Depending on who throws their hat into the ring, L&T might offer its engineering, procurement and construction capabilities,” said Raman.

L&T has been keen on exiting the infrastructure projects it owns. It expects to complete the sale of eight road projects in its portfolio by the end of March, the company said in the earnings concall.