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L&T------------------------------------------------------------------------------------------------RESTRICTED
Analyst meet takeaways
● L&T reported 4Q adjusted PAT of ~Rs14.6 bn, up 9% YoY (street
estimate of Rs15.4 bn). Exceptional gain of Rs2.2 bn was on
account of the sale of stake in a construction equipment JV. For
the year, L&T reported sales growth of 19%, PAT growth of 15%
and order inflow growth of 15% YoY.
● Of the Rs300 bn order inflows in 4Q, management only shared
details about Rs170 bn of wins. Details of the remaining Rs130 bn
of wins are awaited.
● For FY12, L&T has guided for 25% growth in sales and 15–20%
growth in order inflows. Margins are expected to be under
pressure (max. 50–100 bp). The quarters will again remain
volatile, as per management.
● In the post results analyst meet, the key areas of strength were
highlighted as roads, ports and the Middle East, while outlook on
power was relatively muted.
● We are RESTRICTED on the stock.
We attended L&T’s post results analyst meet. The key takeaways are
as below:
● Guidance: Management guided for 25% YoY sales growth and
15–20% YoY order inflow guidance for FY12. Management
expects margins to decline 50-75 bp on heightened commodity
costs.
Order pipeline
● Infra: Management pointed out that ordering activity has
increased in certain segments such as roads and airports
(Bangalore Phase-II will come up for bidding). Management also
expects to qualify and bid for 3–4 airports in the Middle East and
win at least one of the two private ports coming up for bidding
(one each in the East and the West coast)
● Hydrocarbons: Management sees an uptick in ordering activity in
the hydrocarbons segment, especially in the GCC region (L&T is
well placed with two orders in Abu Dhabi and one order in Oman
and has recently won an order in Thailand). The Middle East focus
will remain as management sees opportunity worth Rs150-200 bn
there.
● In the upstream segment, management sees a market of Rs150-
200 bn, about Rs120 bn in mid-downstream (more than 12
pipeline and refinery expansion projects by firms such as RIL,
GAIL, PSU oil firms and GSPC), about Rs90 bn in fertiliser (three
new plants in brownfield and greenfield expansion for firms such
as Tata Chemicals, RCF and IFFCO) and about Rs150 bn in
chemicals (hydrogen, sulphur plants with focus on the Middle
East)
● Power outlook relatively weak: Management sees an extremely
volatile situation in the power sector with uncertainties in land
availability, environment clearances, coal linkages and logistics. In
spite of the uncertainties, management expects 15% YoY growth
for the power segment. Management highlighted that the order
inflow target can be met if L&T wins 5BTG orders.
● Gas power projects: In the gas turbine segment, orders (~Rs15–
200 bn) are expected to come from states such as Gujarat
(Bharuch and Surat), Maharashtra and Karnataka, and
management expects to win at least Rs30–40 bn orders (Rs15 bn
of the Rs35 bn TN gas plant order has been booked so far).
● JV’s for power plants: Management was confident that financial
closure of the CG power plant would happen by Sep-12 (L&T has
a JV with KPCL). In order to garner more inflows, L&T has
recently been increasingly pursuing SEBs (two MoUs have been
signed with the MP state government.)
● Power construction segment: Essentially, civil works for power
plants (third party) can generate ~Rs30–40 bn of orders in FY12.
● Nuclear segment: Management highlighted that after the Japan
incident, delays may come in India’s nuclear energy programme
for a year or so. However, the government initiatives and the evergrowing
energy demand should bring in some traction in this
sector.
● Defence: Management pointed out that growth from the defence
sector is expected to be muted due to limited ordering from the
private sector. L&T-EADS JV in avionics and electronics will
commence production in six to nine months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L&T------------------------------------------------------------------------------------------------RESTRICTED
Analyst meet takeaways
● L&T reported 4Q adjusted PAT of ~Rs14.6 bn, up 9% YoY (street
estimate of Rs15.4 bn). Exceptional gain of Rs2.2 bn was on
account of the sale of stake in a construction equipment JV. For
the year, L&T reported sales growth of 19%, PAT growth of 15%
and order inflow growth of 15% YoY.
● Of the Rs300 bn order inflows in 4Q, management only shared
details about Rs170 bn of wins. Details of the remaining Rs130 bn
of wins are awaited.
● For FY12, L&T has guided for 25% growth in sales and 15–20%
growth in order inflows. Margins are expected to be under
pressure (max. 50–100 bp). The quarters will again remain
volatile, as per management.
● In the post results analyst meet, the key areas of strength were
highlighted as roads, ports and the Middle East, while outlook on
power was relatively muted.
● We are RESTRICTED on the stock.
We attended L&T’s post results analyst meet. The key takeaways are
as below:
● Guidance: Management guided for 25% YoY sales growth and
15–20% YoY order inflow guidance for FY12. Management
expects margins to decline 50-75 bp on heightened commodity
costs.
Order pipeline
● Infra: Management pointed out that ordering activity has
increased in certain segments such as roads and airports
(Bangalore Phase-II will come up for bidding). Management also
expects to qualify and bid for 3–4 airports in the Middle East and
win at least one of the two private ports coming up for bidding
(one each in the East and the West coast)
● Hydrocarbons: Management sees an uptick in ordering activity in
the hydrocarbons segment, especially in the GCC region (L&T is
well placed with two orders in Abu Dhabi and one order in Oman
and has recently won an order in Thailand). The Middle East focus
will remain as management sees opportunity worth Rs150-200 bn
there.
● In the upstream segment, management sees a market of Rs150-
200 bn, about Rs120 bn in mid-downstream (more than 12
pipeline and refinery expansion projects by firms such as RIL,
GAIL, PSU oil firms and GSPC), about Rs90 bn in fertiliser (three
new plants in brownfield and greenfield expansion for firms such
as Tata Chemicals, RCF and IFFCO) and about Rs150 bn in
chemicals (hydrogen, sulphur plants with focus on the Middle
East)
● Power outlook relatively weak: Management sees an extremely
volatile situation in the power sector with uncertainties in land
availability, environment clearances, coal linkages and logistics. In
spite of the uncertainties, management expects 15% YoY growth
for the power segment. Management highlighted that the order
inflow target can be met if L&T wins 5BTG orders.
● Gas power projects: In the gas turbine segment, orders (~Rs15–
200 bn) are expected to come from states such as Gujarat
(Bharuch and Surat), Maharashtra and Karnataka, and
management expects to win at least Rs30–40 bn orders (Rs15 bn
of the Rs35 bn TN gas plant order has been booked so far).
● JV’s for power plants: Management was confident that financial
closure of the CG power plant would happen by Sep-12 (L&T has
a JV with KPCL). In order to garner more inflows, L&T has
recently been increasingly pursuing SEBs (two MoUs have been
signed with the MP state government.)
● Power construction segment: Essentially, civil works for power
plants (third party) can generate ~Rs30–40 bn of orders in FY12.
● Nuclear segment: Management highlighted that after the Japan
incident, delays may come in India’s nuclear energy programme
for a year or so. However, the government initiatives and the evergrowing
energy demand should bring in some traction in this
sector.
● Defence: Management pointed out that growth from the defence
sector is expected to be muted due to limited ordering from the
private sector. L&T-EADS JV in avionics and electronics will
commence production in six to nine months.
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