L&T 2022-23 Annual Report Analysis

Fri, 21 Jul

L&T has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

L&T Income Statement Analysis

• Operating income during the year rose 17.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 22.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 13.4% in FY23 as against 12.8% in FY22.
• Depreciation charges increased by 18.8% and finance costs increased by 2.1% YoY, respectively.
• Other income declined by 16.5% YoY.
• Net profit for the year grew by 22.7% YoY.
• Net profit margins during the year grew from 6.6% in FY22 to 6.9% in FY23.

L&T Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	1,565,212	1,833,407	17.1%
Other income	Rs m	69,718	58,215	-16.5%
Total Revenues	Rs m	1,634,930	1,891,622	15.7%
Gross profit	Rs m	200,233	245,398	22.6%
Depreciation	Rs m	29,480	35,023	18.8%
Interest	Rs m	95,522	97,501	2.1%
Profit before tax	Rs m	144,950	171,090	18.0%
Tax	Rs m	42,039	44,842	6.7%
Profit after tax	Rs m	102,911	126,249	22.7%
Gross profit margin	%	12.8	13.4
Effective tax rate	%	29.0	26.2
Net profit margin	%	6.6	6.9

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L&T Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 1,621 billion as compared to Rs 1,594 billion in FY22, thereby witnessing an increase of 1.7%.
• Long-term debt down at Rs 612 billion as compared to Rs 616 billion during FY22, a fall of 0.7%.
• Current assets rose 7% and stood at Rs 2,212 billion, while fixed assets fell 4% and stood at Rs 1,042 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 3,264 billion as against Rs 3,172 billion during FY22, thereby witnessing a growth of 3%.

L&T Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	820,360	888,589	8.3
Current Liabilities	Rs m	1,593,609	1,620,660	1.7
Long-term Debt	Rs m	616,183	612,177	-0.7
Total Liabilities	Rs m	3,172,271	3,263,675	2.9
Current assets	Rs m	2,073,723	2,212,155	6.7
Fixed Assets	Rs m	1,090,241	1,041,632	-4.5
Total Assets	Rs m	3,172,271	3,263,675	2.9

L&T Cash Flow Statement Analysis

• L&T's cash flow from operating activities (CFO) during FY23 stood at Rs 228 billion, an improvement of 18.9% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -83 billion, an improvement of 126.6% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -116 billion, an improvement of 24% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 32 billion from the Rs 4 billion net cash flows seen during FY22.

L&T Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	191,636	227,770	18.9%
Cash Flow from Investing Activities	Rs m	-36,677	-83,117	-
Cash Flow from Financing Activities	Rs m	-151,815	-115,725	-
Net Cash Flow	Rs m	3,967	31,565	695.6%

Current Valuations for L&T

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 89.8, an improvement from the EPS of Rs 73.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,586.3, stands at 28.8 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.1 times, while the price to sales ratio stands at 2.0 times.
• The company's price to cash flow (P/CF) ratio stood at 16.4 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	1,114.0	1,304.5
TTM Earnings per share	Rs	73.2	89.8
Diluted earnings per share	Rs	73.2	89.8
Price to Cash Flow	x	18.8	16.4
TTM P/E ratio	x	24.1	28.8
Price / Book Value ratio	x	2.9	3.0
Market Cap	Rs m	2,377,731	2,638,160
Dividends per share (Unadj.)	Rs	22.0	24.0

Ratio Analysis for L&T

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.4x during FY23, from 1.3x during FY22. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 2.8x during FY23, from 2.5x during FY22. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 14.2% during FY23, from 12.5% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 17.9% during FY23, from 16.7% during FY22. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 6.9% during FY23, from 6.3% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.3	1.4
Debtors’ Days	Days	11	9
Interest coverage	x	2.5	2.8
Debt to equity ratio	x	0.8	0.7
Return on assets	%	6.3	6.9
Return on equity	%	12.5	14.2
Return on capital employed	%	16.7	17.9

To see how L&T has performed over the last 5 years, please visit here.

L&T Share Price Performance

Over the last one year, L&T share price has moved up from Rs 1,765.2 to Rs 2,586.3, registering a gain of Rs 821.1 or around 46.5%.

Meanwhile, the S&P BSE CAPITAL GOODS Index is trading at Rs 42,401.9 (up 1.7%). Over the last one year it has moved up from 29,013.8 to 42,401.9, a gain of 13,388 points (up 46.1%).

Overall, the S&P BSE SENSEX is up 20.4% over the year.

(To know more, check out historical annual results for L&T and quarterly results for L&T)