Standalone sales grow 19% YoY in FY07 to cross US$ 4 bn mark; 35% YoY in 4QFY07
FY07 and 4QFY07 net profits up 39% YoY and 50% YoY respectively. These are led by expansion in operating margins and lower interest outgo
Operating margins expand by 2.7% in FY07, led by lower sub-contracting charges (as percentage of sales)
Strong performances recorded across EPC and machinery segments
Board recommends dividend of Rs 13 per share (dividend yield of 0.7%)
Standalone | Consolidated | ||||||||
(Rs m) | 4QFY06 | 4QFY07 | Change | FY06 | FY07 | Change | FY06 | FY07 | Change |
Sales | 46,279 | 62,482 | 35.0% | 147,631 | 175,788 | 19.1% | 165,002 | 203,479 | 23.3% |
Expenditure | 40,505 | 54,384 | 34.3% | 136,954 | 158,323 | 15.6% | 149,765 | 179,384 | 19.8% |
Operating profit (EBDITA) | 5,774 | 8,098 | 40.3% | 10,677 | 17,465 | 63.6% | 15,237 | 24,094 | 58.1% |
Operating profit margin (%) | 12.5% | 13.0% | 7.2% | 9.9% | 9.2% | 11.8% | |||
Other income | 1,171 | 2,041 | 74.3% | 4,356 | 4,623 | 6.1% | 5,184 | 9,943 | 91.8% |
Interest | 281 | 63 | -77.5% | 751 | 339 | -54.8% | 1,303 | 538 | -58.7% |
Depreciation | 324 | 698 | 115.3% | 1,145 | 1,700 | 48.5% | 2,435 | 3,449 | 41.6% |
Profit before tax | 6,340 | 9,378 | 47.9% | 13,137 | 20,049 | 52.6% | 16,683 | 30,050 | 80.1% |
Extraordinary income/(expense) | 81 | - | 698 | - | 698 | - | |||
Share of profit/(loss) from associates | - | - | - | - | 715 | 951 | 32.9% | ||
Minority interest | - | - | - | - | 450 | 1,162 | 158.2% | ||
Tax | 1,752 | 2,371 | 35.3% | 3,713 | 6,019 | 62.1% | 4,473 | 7,438 | 66.3% |
Profit after tax/(loss) | 4,668 | 7,008 | 50.1% | 10,121 | 14,030 | 38.6% | 13,172 | 22,401 | 70.1% |
Net profit margin (%) | 10.1% | 11.2% | 6.9% | 8.0% | 8.0% | 11.0% | |||
No. of shares | 283.3 | ||||||||
Diluted earnings per share (Rs) | 79.1 | ||||||||
P/E ratio (x) | 23.5 |
Domestic contracts | Contract size (Rs bn) |
Construction of airport terminal at Delhi for Delhi International Airport Limited |
55.6 |
EPC contract for construction, installation and commissioning of captive power plant for naphtha cracker project, at Panipat, Haryana for Indian Oil Corporation Limited |
11.4 |
Construction of port facilities, embarkment, bridges, jetty and township including railway electrification and water system works at Dhamra Port, Orissa for The Dhamra Port Company Limited |
11.1 |
EPC contract for construction, installation and commissioning of naphtha cracker and associated unit for naphtha cracker project, at Panipat, Haryana for Indian Oil Corporation Limited |
9.1 |
Overseas contracts |
|
Engineering, procurement, installation and commissioning for 2 new offshore platform , a flare platform and interconnecting bridge for block 5 development in Qatar for Maersk Oil Qatar AS |
11.3 |
Residual basic engineering, detailed engineering, project management and procurement of the equipment and materials for 700 tonnes per day (TDP) methanol and 100 TPD carbon monoxide plant at AL-Jubail, Kingdom of Saudi Arabia for Saudi Formaldehyde Chemical Company |
5.5 |
As far as the electrical and electronics (E&E) business is concerned, revenues grew by 33% YoY during FY07. Growth in this segment should be seen on the backdrop of a benign investment scenario in the power sector, which has continued to benefit L&T. The Machinery & Industrial Products (MIP) business recorded sales growth of 25% YoY during the fiscal.
(Rs m) | 4QFY06 | 4QFY07 | Change | FY06 | FY07 | Change |
Engineering & Construction | ||||||
Revenue | 36,667 | 48,973 | 33.6% | 115,704 | 134,251 | 16.0% |
% share | 76.5% | 75.3% | 75.8% | 73.5% | ||
PBIT margin | 11.2% | 13.6% | 7.4% | 10.5% | ||
Electrical & Electronics | ||||||
Revenue | 4,618 | 6,932 | 50.1% | 15,500 | 20,671 | 33.4% |
% share | 9.6% | 10.7% | 10.2% | 11.3% | ||
PBIT margin | 15.5% | 13.8% | 14.7% | 14.9% | ||
Machinery & Industrial Products | ||||||
Revenue | 4,518 | 6,641 | 47.0% | 14,738 | 18,430 | 25.0% |
% share | 9.4% | 10.2% | 9.7% | 10.1% | ||
PBIT margin | 16.2% | 20.6% | 13.5% | 17.0% | ||
Others | ||||||
Revenue | 2,116 | 2,514 | 18.8% | 6,722 | 9,413 | 40.0% |
% share | 4.4% | 3.9% | 4.4% | 5.2% | ||
PBIT margin | 13.4% | 9.9% | 8.0% | 7.8% | ||
Total* | ||||||
Revenue | 47,919 | 65,059 | 35.8% | 152,664 | 182,764 | 19.7% |
PBIT margin | 12.2% | 14.2% | 8.8% | 11.5% |
Lower sub-contracting charges aid margin expansion: On a standalone basis, L&T’s operating margins expanded by 270 basis points (2.7%) during FY07, which was a result of stock related adjustments and lower sub-contracting charges. However, raw material costs (as percentage of sales) increased from 24.6% in FY06 to 25.4% in FY07. Based on segments, while PBIT margins of the E&C division improved from 7.4% in FY06 to 10.5% during FY07, those for the E&E business expanded marginally to near 15% in FY07.
Margin expansion and higher other income aid bottomline growth: The 2.7% expansion in operating margins combined with higher other income and lower interest costs aided L&T’s bottomline growth during the fiscal, which grew at double the rate then topline growth. But for the effect of an extraordinary gain in FY06 (on account of profit on sale of milk processing equipment and glass container businesses), the bottomline growth figure would have been higher in FY07.