L&T announces Rs 10,000 cr share buyback, Rs 6/share special dividend

Engineering and construction giant Larsen & Toubro on Tuesday announced that its board has approved a Rs 10,000 crore share buyback of up to Rs 3,000 apiece, as well as a special dividend of Rs 6 per share for the fiscal ending March 2023. The company also reported a better-than-expected consolidated net profit of Rs 2,493 crore for the first quarter of FY24.

“From an efficiency standpoint, the buyback is an important exercise to support the company's progress towards targeted return on equity ranges,” said Nirav Karkera, who heads research at financial services provider Fisdom.

L&T’s total revenue from operations jumped 34% year-on-year to Rs 47,882 crore for the quarter ended June 30, 2023. During the same period, the Mumbai-based company also saw a 57% y-o-y rise in orders to the tune of Rs 65,520 crore, taking the consolidated order book to Rs 4,12,648 crore.

The brand’s biggest segment - infrastructure projects - roped in orders worth Rs 40,051 crore during the April-June quarter of the year, registering an over 100% y-o-y growth and leading the overall segment order book to Rs 3,01,159 crore as of June 30, 2023.

“Capex buoyancy in India & GCC (Gulf Cooperation Council) is providing the much-needed tailwinds for growing our “Projects & Manufacturing” portfolio, ably supported by the resilient performance of the “Services” businesses,” said S N Subrahmanyan, Chief Executive & Managing Director, Larsen & Toubro Limited.

“The legacy projects received during high commodity inflation period will likely see execution in the upcoming quarter,” said Prabhudas Lilladher analyst Amit Anwani, adding that a revival in the segment may come into play from the third quarter onwards.

The company’s financial services arm - L&T Finance Holdings - recorded a 2% y-o-y increase in income from operations at Rs 3,020 crore during the quarter, led by higher disbursement in the retail sector. The total loan book of the listed subsidiary stood at Rs 78,566 crore at the end of June 2023.

The EBITDA margin for its IT & technology services segment however fell to 20.6% in the quarter ended June, 2023, compared to 21.9% in the corresponding quarter of the previous year, on the back of increased talent acquisition and retention costs.

Going forward, the company will maintain focus on cash generation and capital allocation to drive profitability with return accretive growth, it said in a press statement.