L&T sees order book position rising by Rs 1 trillion more in FY25
L&T is also looking at bringing the debt of its Hyderabad Metro down by another Rs 2,000 crore and is also working to improve its economic viability. (Reuters)
Larsen & Toubro (L&T) expects its order book position to rise by another Rs 1 trillion in FY25, with the engineering and infrastructure conglomerate being bullish on India and other markets where it has presence, president and chief financial officer R Shankar Raman told FE.
The company — which has earmarked a capex of Rs 3,500 crore- Rs 4,000 crore for FY25 — is also on the lookout to acquire startups with a ticket size of $100-200 million to enhance its semiconductor business.
L&T is also looking at bringing the debt of its Hyderabad Metro down by another Rs 2,000 crore and is also working to improve its economic viability.
“We have provided guidance of 10% growth in order inflow and a 15% growth in revenue. We have also guided for 15% growth in sales. Our sales are also growing and ideally, we should land up with somewhere at Rs 1 trillion more than where we are today in FY25, according to a back of the envelope calculation,” Shankar Raman said.
On Thursday, Shankar Raman, earlier senior executive vice-president, whole-time director and CFO, was elevated as the president and CFO of the company with immediate effect.
“My sense is that investment in infrastructure in the country will continue and that’s the backbone for a competitive economy. We are pretty bullish. We continue to be bullish on other markets where we operate in such as Middle East, Far East or Africa,” he said.
In FY24, L&T had order inflows worth over Rs 3 trillion, with its order book swelling to about Rs 4.75 trillion.
Earlier this year, Raman had told FE that the company was expecting its order book position to breach the Rs 5-trillion mark in the first half of FY25, at least a year ahead of its earlier estimates.
L&T, which has forayed into semiconductor design and was planning to set up a lab with an investment of up to Rs 830 crore, is in the process of building a team.
“There is a lab that will operate out of Houston, US, and another in Bengaluru, and there will be outposts in Chennai and Hyderabad. At the moment, we are assembling our front- and back-end people. So, bulk of FY25 will go in completing this team formation and we could basically buy one or two inorganic startups to help us bring down the time-to-market,” he added.
L&T is looking at startups are already working on design with a particular customer, he said, adding “we could also spend maybe $100-200 million in getting some of these acquisitions tucked in”.
“If we get a company with a team of 50 people, who also come in with an order book, it would bring in bigger benefits,” Raman added.
Speaking about Hyderabad Metro, he said the plan was to reduce debt by another Rs 2,000 crore, but did not provide a timeline. The firm is expecting Rs 1,000 crore more from the government and Rs 1,000 crore from monetisation of land parcels, and reduce the debt from Rs 12,000 crore to Rs 10,000 crore. “We will do an encore to get this Rs 12,000 crore further down to Rs 8,000 crore.”
A year ago, the debt from Hyderabad Metro was at Rs 14,000 crore. The firm got about Rs 1,000 crore from the Telangana government as part of a Rs 3,000-crore soft loan, even as it monetised a portion of the real estate for another Rs 1,000 crore.
“If the debt comes to about Rs 7,000-8,000 crore and the traffic goes up by 1 lakh from 4.6-4.7 lakh people, the asset will become far more attractive to investors,” he said, adding it is currently working to improve the economic viability.
The firm has also earmarked a capex of Rs 3,500-4,000 crore to upgrade equipment, manufacturing of electrolysers and building of data centres among others. “This is the same ballpark that we have been doing every year,” he added.