Ladies and gentlemen good day and welcome to the Larsen & Toubro Limited Q3 FY 2025 Earnings Conference Call. As a reminder, all participants' lines will be in a listen-only and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. Today we have with us on the call Mr. Subramanian Sarma, Whole-Time Director and President of the Energy Division; and Mr. P. Ramakrishnan, Head, Investor Relations of Larsen & Toubro Limited. I now hand the conference over to Mr. P. Ramakrishnan. Thank you and over to you sir.

P. Ramakrishnan: Thank you, Sagar. Good evening ladies and gentlemen. This is P.R., P. Ramakrishnan. A very warm welcome to all of you into the Q3 FY 2024 earnings call of Larsen & Toubro. The earnings presentation was uploaded on the stock exchange and on our website around 6:30 PM. Hope you have had a chance to have a review -- a quick review of the same. As usual. instead of going through the entire presentation. I will summarize the highlights for the quarter followed by the financial performance summary in the next 30 minutes or so. And post which myself and my -- Mr. Subramanian Sarma, we will take the questions. Before I begin, the overview a brief disclaimer. The presentation that we have uploaded on the stock exchange and our website today, including the discussions we may have on the call today, may contain certain forward-looking statements concerning the group's performance, business prospects, and profitability. This would be subject to several risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. I would request you to go through the detailed disclaimer which is available in Slide 2 of the earnings presentation that we have uploaded just now. The growth momentum of the Indian economy has waned a bit in the recent quarters. The urban consumption has tapered off as the excess savings from the pandemic have been exhausted, formal sector wages have slowed down, and the consumption lending norms have also been tightened. Rural consumption, on the other hand, has continued at a healthy clip on the back of robust agricultural activity. Public investments have also slowed down due to the recent central and state elections in the country, whereas private investments have been episodic at best. Nevertheless, the recent pick-up in the various high performance frequency -- high-frequency economic indicators suggest that the slowdown in economic activity has possibly bottomed out and could recover on the back of improved government spends in the near-term. Moving on to the international landscape. The global situation continues to be marked by military conflicts, the changes in the political landscape across several countries, and trade wars which is threatening to reignite inflation and minimal policy choices available to central banks. Similarly, the government across countries with elevated debt to GDP ratios are finding it difficult to impact fiscal impulses at will. On the positive side though, the cease fire between Hamas and Israel is expected to bring the much-needed stability in the GCC region. The GCC region, led by Saudi Arabia, is continuing to strengthen its physical and digital infrastructure, besides monetizing its oil and gas assets. Coincidentally, multiple GCC countries are also embarking upon the energy transition journey with utmost seriousness. Having covered the macro landscape, let me share a few important highlights of the company for the quarter. The company posted or reported the highest ever order inflow in the history. This was received during the quarter for INR1.16 trillion. The growth of 53% on a Y-on-Y basis was backed by a strong ordering momentum in the Infrastructure, Hydrocarbon, CarbonLite Solutions, and Precision Engineering & Systems businesses. Despite the lackluster economic activity in India in Q3, we have secured INR987 billion, which is 64% Y-on-Y basis of orders in the Projects & Manufacturing business portfolio during Q3 with the domestic and international contributing about 48% and 52%, respectively. Moving on L&T Energy Green Tech Limited has won 90,000 MTPA green hydrogen capacity in the tranche two of the green hydrogen production PLI at an average incentive of INR 11.11 per kg -- INR 11.11 per kg of hydrogen. This incentive to be distributed over a period of three years will aggregate to a total benefit of around INR 300 crores. Thirdly LTIMindtree recorded its highest ever deal wins in Q3 FY 2025 at USD 1.68 billion. Similarly LTTS -- L&T Technology Services also witnessed its highest ever large deal bookings during the quarter aided by eight large deals across segments which includes one USD 500 million deal, two USD 35 million deal, two USD 25 million deal and three USD 10 million deals. LTTS signed a definitive agreement on November 11, 2024 to acquire a 100% stake in Silicon Valley-based Intelliswift and its subsidiaries for a consideration of USD 110 million. The objective of this acquisition was to deepen the company's offerings across software product development, platform engineering, digital integration, data and AI. Intelliswift has 25-plus Fortune 500 logos including five of the top ER&D spenders in software and technology. And it is also associated with four of the top five hyperscalers. This acquisition got fully closed this month. Moving on to Financial Services. L&T Finance Limited achieved a portfolio retailization of 97% in Q3 FY 2025 a milestone this business had achieved way ahead of its Lakshya 2026 targets. Lastly, the Data Center business has entered into a strategic business partnership with E2E Networks an Indian cloud and AI cloud provider towards the adoption of Gen AI solutions in India to foster a fundamental shift in the way accelerated computing on cloud is used by Indian corporates. Further an investment agreement was signed on November 5, 2024 for the acquisition of 21% stake in E2E Networks of which 15% stake has been acquired through a preferential allotment of equity share on December 4 for an aggregate consideration of INR 10.79 billion. The secondary acquisition of 6% is expected to be completed before May 30, 2025. Now let me now cover the various financial performance parameters for Q3 FY 2025. This quarter was a quarter of robust performance across the various financial parameters. Our group order inflows for Q3 registers a Y-on-Y growth of 53%. On the back of a strong ordering momentum our order book is at INR 5.64 trillion on December 2024. This has registered a growth of 20% on a Y-on-Y basis. Aided by a strong execution momentum from several businesses within the Projects & Manufacturing portfolio our group revenues for the quarter registered a growth of 17% on a Y-on-Y basis. Our margins of the Projects & Manufacturing portfolio at 7.6% is in line with the corresponding period of the previous year. Our net working capital to revenue is at 12.7% as on 31 December, 2024 this improvement of almost 390 basis points on a Y-on-Y basis. Our return on equity on a trailing 12-month basis as on December 2024 is at 16.1% improving by 90 basis points on a Y-on-Y basis. I now move on to the individual performance parameters. As said earlier, our group order inflows for Q3 FY 2025 at INR 1,160 billion registered a Y-on-Y growth of 53%. Within the group order inflows our Projects & Manufacturing businesses secured order inflows of INR 987 billion for Q3 reporting a robust growth of 64% over the corresponding period of the previous year. Our Q3 order inflows in the P&M portfolio are mainly from Infrastructure, CarbonLite Solutions, Hydrocarbon and the Precision Engineering & Systems businesses. During the current quarter, the share of international orders in the P&M portfolio is at 52% vis-à-vis 67% in Q3 of last year. Moving on to the order prospects pipeline. We have a total order prospects pipeline of INR5.51 trillion for the remaining three months of FY 2025 vis-à-vis INR6.27 trillion at the same time last year. This represents a drop of 12% when compared to December 2023 order prospects pipeline. This decrease is primarily due to the fall in the Hydrocarbon and CarbonLite prospects. The broad break-up of the overall prospects pipeline for the remaining three months would be as follows. The share of Infrastructure is INR4.00 trillion vis-à-vis INR4.01 trillion last year. The hydrocarbon prospects pipeline is at INR1.44 trillion as at December 2024 when compared to INR1.71 trillion as at December 2023. The Heavy Engineering and the Precision Engineering & Systems business, which caters to what we call the Hi-Tech Manufacturing segment, the order prospects pipeline is at INR0.06 trillion vis-à-vis INR0.16 trillion last year. Moving on to the order book. Our order book is at INR5.64 trillion as on December 2024, which is up 20% vis-à-vis December 2023 last year. As the Projects & Manufacturing business is largely India centric, 58% of this order book is domestic and 42% international. Of the international order book of INR2.37 trillion, around 84% is from Middle East and 3% from Africa and the remaining 13% comprised from other countries of the world. Like I said earlier, the various countries in the Middle East are continuing to focus on investments in oil and gas, infrastructure, industrialization and energy transition. The breakdown of the domestic order book of INR3.27 trillion, which I said is 58% of the overall order book as of December comprises of central government order book orders at 15%, state government orders at 26%, orders from public sector corporations or state-owned enterprises, the share being 39% and the private sector contributing to 20% of the domestic order book. Approximately around 15% of the total order book of INR5.64 trillion is funded by bilateral and multilateral funding agencies. Once again that 90% of this total order book comprises orders from infrastructure and energy. You may refer to the presentation slides for further details. During the nine-month period FY 2025, we have deleted orders of INR6 billion from the order book. There has been no deletion of orders from the order book in the current quarter, which is Q3 FY 2025. As of December 2024, our slow-moving orders is around 0.5% of the order book. Coming to revenues. Our group revenues for Q3 FY 2025 at INR647 billion registered a strong Y-on-Y growth of 17%. International revenues constituted 51% of the revenues during the quarter. The strong execution momentum in infrastructure, hydrocarbon and the Precision Engineering & Systems businesses within the P&M portfolio drove the overall group revenues for the quarter. Within the group revenues, the revenues for the Projects & Manufacturing business for Q3 FY 2025, is INR 473 billion, up by 20% over the corresponding quarter of the previous year. Moving on to EBITDA margin. Our group level EBITDA margin, without other income, for Q3 FY 2025 is 9.7%, vis-à-vis 10.4% in Q3 of the previous year. This EBITDA margin variance is mainly due to the revenue mix favoring the Projects & Manufacturing segment and also lower operating margin in the ITTS segment. The detailed break-up of the EBITDA margin business-wise, including other income, is given in the annexures to the earnings presentation. You would also notice that the EBITDA margin in the Projects & Manufacturing portfolio for Q3 FY 2025 is at 7.6% in line with the corresponding quarter of the previous year. I will cover the details a little later when I will talk about the performance of each of the segments. Our consolidated PAT for Q3 FY 2025 at INR 33.6 billion is up 14% over Q3 of the previous year. This PAT growth is reflective of increased activity levels and improved treasury operations. The primary reason behind group PAT growth of 14%, despite group revenues growing at 17% for the quarter, is the lower operating leverage in the ITTS portfolio and slightly higher credit costs in our Financial Services business. The group performance P&L construct along with the reasons for major variances under the respective function heads is provided in the earnings presentation. You may go through the same for further details. Coming to working capital. Our net working capital to sales ratio has improved from 16.6% in December 2023 to 12.7% in December 2024, mainly due to an improvement in the gross working capital to sales ratio backed by strong customer collections during the quarter. Our group level collections, excluding the Financial Services segment for Q3 FY 2025 is INR 591 billion vis-à-vis INR 494 billion in Q3 FY 2024 registering an increase of 20% on a Y-on-Y basis. You may also like to go through the cash flow statement as part of annexures to the earnings presentation. Finally, the trailing 12-month return on equity for Q3 FY 2025 is 16.1% vis-à-vis 15.2% in Q3 FY 2024, an improvement of 90 basis points for the year. Very briefly, I will now comment on the performance of each business segment before we give our final comments on our outlook for the remaining period of current year. First, Infrastructure. Coming to order inflows, this segment secured orders for INR 491 billion for Q3 FY 2025, registering a robust growth of 14% on a Y-on-Y basis. International orders constitute 74% of the total order inflows. During the current quarter, the orders were mainly received in Renewables, Power Transmission & Distribution, Water, Buildings & Factories and Minerals & Metals sectors. Our order prospects pipeline in Infrastructure segment for the remaining three months is around INR 4 trillion vis-à-vis, INR 4.01 trillion during the same time last year. This Infra prospects pipeline of INR 4 trillion comprises of domestic prospects of INR 3.15 trillion and international prospects of INR 0.85 trillion. The sub-segment break-up of the total order prospects in Infra would be as follows. Transportation Infra share is 35%, Heavy Civil Infrastructure at 18%, Water also at 18%, Buildings & Factories at 14%, Minerals & Metals at 6%, Power Transmission & Distribution at 6%, and Renewables at 3%. The order book for this segment is at INR 3.61 trillion as on December 2024. The book bill for Infra is around three years. The Q3 revenues at INR 321 billion registered a healthy growth of 15% over the comparable quarter of the previous year, largely aided by execution across multiple jobs from a large opening order book. Our EBITDA margin in this segment for Q3 FY 2025 is at 5.5% in line with the corresponding quarter of the previous year. Moving on to the next segment that is Energy Projects. This comprises of Hydrocarbon and CarbonLite Solutions. The receipt of two ultra-super critical thermal power plant orders helped the CarbonLite Solutions order book, whereas Hydrocarbon benefited from the receipt of a mega international onshore order. We have a strong order prospects pipeline of INR 1.44 trillion for this Energy segment for the balance three months comprising of entirely Hydrocarbon prospects. The order book of this Energy segment is at INR 1.46 trillion as of December 2024, with the Hydrocarbon order book at INR 1.1 trillion and CarbonLite Solutions at INR 0.27 trillion. The Q3 FY 2025 revenues for the segment at INR 111 billion registers a strong growth of 41% driven mainly by the execution ramp-up in domestic and international projects of Hydrocarbon, whereas lower revenues in CarbonLite Solutions are reflective of a depleting opening order book. The Energy segment margin in Q3 FY 2025 is at 8.3% vis-a-vis 9.7% in Q3 FY 2024. The negative variation in Hydrocarbon margin over the previous year is largely reflective of the stage of execution of the various jobs in the portfolio, whereas CarbonLite Solutions margin improved due to a favorable claims settlement. We will now move on to Hi-Tech Manufacturing segment, which comprises of the Precision Engineering & Systems and the Heavy Engineering businesses. The Precision Engineering & Systems business benefits from the receipt of the K9 Vajra repeat order and multiple international orders helps the Heavy Engineering order book. The order book for this segment at INR 418 billion as of December 2024. The order prospects pipeline for the remaining three months in this segment is around INR 65 billion for the next three months. The strong execution momentum continues in the Precision Engineering & Systems, whereas muted revenues in Heavy Engineering is reflective of jobs in the early stages of its progress. The execution cost savings in Heavy Engineering business aids segment margin improvement at the overall segment level. Moving on to the next segment, which is the IT and the Technology Services portfolio. This comprises of the two listed subsidiaries which is LTIMindtree and LTTS. The revenues of this segment at INR 121 billion in Q3 FY 2025 registered a modest growth of 8% largely reflective of the present market conditions. Despite the ongoing macroeconomic concerns and as I mentioned earlier both these companies recorded very strong deal wins in the quarter. The segment margin decline during the quarter is mainly due to wage hikes and ForEx losses in both these companies. I will not dwell too much on this segment as both the companies in this segment are listed entities and the detailed fact sheets are already available in the public domain. Next, we move on to L&T Finance. Here again the detailed results are available in the public domain, but very briefly I will summarize. The Q3 reward around healthy credit calibrated growth in the disbursements. The credit cost during the quarter was largely in check despite the ongoing headwinds in the micro finance portfolio and the balance sheet is strong on the back of built-in macro prudential buffers. The company expects credit cost in rural group and the micro finance loans to peak in Q4 FY 2025 and some normalization from Q1 FY 2026 onwards. The Financial Services business had achieved 97% retailization of its loan book in December 2024 well ahead of the Lakshya 2026 targets. The return on assets remained healthy at 2.27% despite the sectoral headwinds. And finally, adequate capital in the balance sheet is available to pursue growth in the medium-term. Moving on to the Development Projects segment. This segment includes the Power Development business comprising of Nabha Power and Hyderabad Metro. Most of the revenues in this segment are contributed by Nabha Power. A combination of improved PLF and higher energy charges in the Nabha Power drives the segment revenue growth. At this juncture, let me give you some ridership statistics on the Hyderabad Metro. The average metro ridership was 4.32 lakh passengers a day in Q1 FY '25, 4.68 lakh passengers per day in Q2 FY '25 and remains around 4.45 lakh passengers a day in Q3 FY '25. The sequential decline in ridership was mainly due to the festive season holidays during the quarter. Our ridership in Q3 FY '24 was 4.44 lakh passengers a day. So, on a Y-on-Y basis, it's largely the same. The metro at a PAT level posted a loss of INR 2.03 billion in Q3 FY '25 as against a loss of INR 2.54 billion in Q3 of the previous year. The improvement is largely on account of lower interest costs consequent upon reduction in debt. Moving on to the Others segment. This segment comprises Realty, Construction Equipment & Machinery, Rubber Processing Machinery and Industrial Valves and to some extent the residual portion of the Smart World & Communications business. The Q3 revenue at 9% growth over the corresponding quarter of the previous year was mainly contributed by a higher handover of residential units in the Realty business and improved sales in the Industrial Machinery and the Products business. The segment margin improvement is mainly due to a favorable revenue mix in Industrial Machinery & Products business. Coming to the last part of my presentation, the outlook for the year -- the revised -- the outlook for the year -- current year FY '25 taking into account how we see Q4. Despite the initial hiccups the Indian economy is poised for steady growth with projections indicating a GDP growth of 6.5% to 6.8% for the fiscal year FY '25. The rural consumption has remained encouraging supported by strong agricultural performance due to a favorable monsoon. The services sector continued to be a key driver of growth. There are initial signs of a pick-up in government spending post the center and various state elections, which will give the necessary impetus to the Infrastructure CapEx spend in the near-term. As the country strives to achieve the vision of a Vikasit Bharat by 2047, the government is expected to maintain its strong commitment to infrastructure investment, recognizing it as a key driver of broader economic growth. The forthcoming union budget is likely to strike the balance between policy continuity and fiscal discipline. The country would still be one of the fastest-growing economies in the world, although the pace and sustainability of the growth trend would be shaped on how the country navigates, challenges around global and financial market volatility, potential implications of intensified trade wars, domestic inflationary impulses, the compulsions around the coalition-led government and finally a trade-off between social spends and pursuing long-term development goals. The global economy at the current juncture is at a crossroad whereas policy changes by the USA could result in another growth of tariff costs. On the other hand the cease fire between Hamas and Israel should improve the situation in the GCC region. The European economies continue to move sideways while questions over the Chinese economy further clouds the growth picture and put global economies towards fragmentation and localization. Further, we expect multiple countries to enhance their business outlays in an uncertain world. The consequences due to climate change is getting serious attention and is leading to substantial investment outlays into cleaner technologies. Lastly, artificial intelligence and all its attributes and variants is gaining faster acceptance and adoption across the world. On a positive note, the GCC region led by Saudi Arabia will continue to strengthen its physical and its digital infrastructure apart from monetizing its oil and gas assets. Coincidentally, multiple GCC countries have also embarked upon the energy expansion transition journey with relatively large investment outlays. In this economic backdrop, the company will continue to pursue its objective of a volume-led profitable and return accretive growth. The company has robust order prospects for the near-term and is confident of maintaining its growth momentum by leveraging the emerging opportunities and maximizing shareholder value on a sustainable basis. Before we conclude, let me cover the guidance that we had given on the various parameters for the year FY 2025. First, order inflows. You would recall that we had given a guidance of 10% growth in order inflows for the year. For nine months FY 2025, our order inflows at INR 2,670 billion is up by 16% over the corresponding period of the previous year. And looking at a strong prospects pipeline of INR 5.51 trillion for Q4, we believe that we would be surpassing the 10% guidance on order inflows for FY 2025. With India ordering momentum expected to pick-up in Q4, and since the international prospects pipeline also remains healthy, we feel confident of exceeding the guidance on order inflows. As we speak, we seem to be well placed in orders in the Projects & Manufacturing segment of almost INR 500 billion. Coming to revenues we had guided for a 15% growth in revenues for FY 2025. Since our group revenues for nine months FY 2025 has reported a growth of 18% and our order book remains strong, we do believe that there are potential upsides to the revenue guidance of 15% for the full year FY 2025. Moving on to the EBITDA margin. Our guidance on EBITDA margin for the Projects & Manufacturing remains – businesses remained at 8% that we guided at the start of the financial year. This 8.2% is for the full year FY 2025. On net working capital, we had earlier guided the NWC to revenue of 15% in March 2025. Since our NWC to revenue is at 12.7% as of December, we believe that our net working capital to revenue should be around the same levels that we have printed for as of December 2024. Lastly, as you are aware, our free cash flow generation has been robust in the last couple of years and we are also stepping up our capital allocation into newer business areas like green energy, data centers and semiconductor design. We do expect some of these investments to start contributing to group returns in the next Lakshya plan of the company, which will start from FY 2027 and end at FY 2031. With this I conclude. Thank you, ladies and gentlemen for the patient hearing. We will now begin the Q&A. My request to all the people who want to ask questions, in case if you have any big book-keeping questions, please feel free to connect to me or Harish my colleague afterwards. We have with us also my senior colleague Mr. Subramanian Sarma, who is the President and Head of the Energy business. Over to you.

Thank you very much. We will now begin the question-and-answer session [Operator Instructions] Our first question comes from Mohit Kumar from ICICI Securities. Please go ahead.

Yes. Hi. Thanks for the opportunity, sir. Sir, first question is on the – I think you mentioned that in Projects & Manufacturing, you are favorably placed in the INR 500 billion order. Does it mean that you are L1 in those orders? Is that the right understanding?

P. Ramakrishnan: I said, we are well placed. It is just to give the comfort that while we get into Q4, since you all know that a 10% guidance for the full year also means that we need to print almost INR 650 billion of orders in Q4. So just to give the comfort that we seemingly are on track, because we are well placed in four, five very large orders. But there is – and always, since the orders are large, there can be always a slippage into subsequent quarters or not close the contract itself.

Understood sir. My second question is, sir, have we included the order for 5 gigawatt, 19 gigawatt hour solar plus order [ph] in this quarter? And is it possible to lay out the scope and difference of responsibility between you and Power China? Is it possible, to give a color on the size of the project?

P. Ramakrishnan: So, you are referring to the renewables press release that we had...

Q – Mohit Kumar: Yes. Preferred -- where you are preferred EPC contractor for the Middle East, 5 gigawatts, 19 gigawatt hour…

P. Ramakrishnan: So, it is a ultra-mega order and that has been taken in the order inflow, for Q3. We received the client clearance some time in January, and we have released the press release recently. It is -- I would say, it is quite a very complex order and one of the largest renewable investments that UAE is embarked upon. And we feel -- I mean it's a prestigious order inflow for us.

Q – Mohit Kumar: And what is the difference of responsibility between you and Power China?

No, Power China is a separate contract. The total generation capacity and storage capacity is split into two contracts. Sorry, this is Sarma, here. And those two contracts are independent contracts. What we announced is related to our part, and similar scope is being done by China Power. So they are independent contracts mutually exclusive, and directly with the customer. We have no relationship with China Power, on this contract.

Q – Mohit Kumar: Understood, sir. And absolutely clear, sir. My last question sir, is the development of green hydrogen project, which you have won in the last quarter, is it contingent on finding the market for green hydrogen in the advanced listed developed markets? Is that right understanding?

Yes, yes. I mean, we applied this. What we announced was this PLI scheme. And under that PLI scheme, we have been successful and we secured the INR 300 crores incentive, which is subject to setting up that capacity. I mean, it is linear. I mean, if you set-up the full capacity, then we'll be entitled for that full incentive. Otherwise, it will get discounted based on the capacity we set-up within that timeline. Now, of course, our decision will also depend upon how the market evolves and the economics related to that investment decision. We are very actively pursuing many opportunities within India, as well as outside. And we are quite confident that some of those will materialize. Now, to what extent and when is something, a little bit uncertain now, but we are very hopeful.

Q – Mohit Kumar: Understood, sir. Thank you and best of luck, sir. Thank you.

Thank you. Mohit.

Thank you. The next question comes from Amit Anwani from PL Capital. Please go ahead.

Q – Amit Anwani: Thanks for taking my question. My first question is on the execution on stellar [ph] this time. We can see the domestic Infrastructure business revenue was kind of moderate -- seen a moderate growth. So any challenges you faced this quarter, with respect to project execution in domestic market in any of the projects, which are there?

P. Ramakrishnan: No. So, let me answer that Amit. The execution of our – especially, of the few projects in the domestic sector with respect to Infrastructure segment, I think it is continuing as per plan. There have been some isolated cases where we had to bring down the execution, because of delayed payments. But otherwise, the execution momentum is in line with our budgets that we have done, and in line with our guidance itself.

Q – Amit Anwani: Yes. Second question on the prospects in the Energy business. You said, the INR 1.44 trillion pertains to only Hydrocarbon and there is I think, I guess, no thermal order prospects, which we are accounting now. Is it that the prospects have kind of deteriorated in the market or we have been selected and now not taking orders in thermal, in upcoming quarters?

No, I think thermal -- the INR 1.44 trillion has got several components. One is, thermal power plant in India. Then, we have hydrocarbon projects both in India as well as in West Asia. And then we also have some gas to power opportunities. I think between the three, we believe that we have a very good bid slate, and we should be able to secure a reasonable size of that prospect. Now thermal power plant in India we have made a strategy to bid for BTG that is Boiler Turbine Group, and we'll continue to pursue those. And yes, to some extent, we'll be selective from a point of view of our manufacturing capacity and our ability to execute those jobs and provided of course the location and the situation conditions are favorable for us to execute in an efficient manner.

P. Ramakrishnan : So Amit just to add to what Mr. Subramanian Sarma told is the order prospects that I have articulated in the call, they are all for the -- what we believe are tenders, which are going to come, which are addressable not necessarily the orders, which could be orders that is getting tenders could be larger, but it's all what we call the addressable L&T universe for the three months. So to that extent some of the opportunities may be coming in the next year, but not in the next three months or so.

Just to clarify the order we just won in Mumbai are only catering to BTG, which we won in 3Q?

Yes. What we have printed or what we have disclosed in Q3 FY 2025 relates to the BTG orders of NTPC.

Yes, sir. Thanks a lot. Thank you so much.

Thank you. The next question comes from Aditya Bhartia from Investec. Please go ahead.

Hi. Good evening, sir.

Good evening.

Sir, my first question is on the status of the submarine tender that we wanted to participate in. There have been some media articles around that. So if you could just clarify about what's really happening over there?

Okay. So there are media reports on this matter in the public domain. We cannot comment further as the matters pertaining to the bid are subject to an NDA. We have also sort out some clarification with the customer. But unfortunately, I'm not in a position to comment further on this particular ,matter because of non-disclosure agreement compliance.

Sure sir. Understood. So my second question is on margins in the Infra vertical. It has been a while since margins have been hovering around this range and we have not really seen a big expansion. Do you think this is a new normal wherein we are looking at lower working capital, but that also kind of entails lower margins? Nothing wrong with the strategy just trying to understand if this should be seen as a new normal.

P. Ramakrishnan : Okay. So the Infrastructure margins have been a little softer in the last two to three years. We do expect with the slow depletion of the orders that we had taken prior to FY 2022 2023, all of them tapering on the last stages of execution. The new set of orders, which are large orders, subject to the fact that if we are able to complete them on schedule, we do expect some improvement in margins. But having said this, as a projects company, we have been -- we give guidance only for the particular year under revenue. So in the month of May after the internal budgets which we will be closing out in the next one month or so, I think we'll have a better visibility to comment as to how the margin trajectory for FY 2026 pans out across the Projects & Manufacturing portfolio. Having said this, as you rightly mentioned, despite the fall in margins the overall return on the investments each of these businesses, each of the businesses under the Projects & Manufacturing portfolio, they have actually improved on the back of timely billing and faster collections.

Sure, sir. And my last question is just wanted to understand if we are looking to get into some more stuff on the semiconductor side maybe a foundry or maybe a display fab for electronics. Are we kind of thinking in that direction also or would we be restricted to fabless?

P. Ramakrishnan : So you have taken two questions on this. So the first point is as far as semiconductor is concerned, the current approach is to build-up the semiconductor design, build-up a good set of products, which will obviously will have to be get manufactured through other fabs, before even exploring to decide whether we want to go on to investment in fab itself. The only thing I can talk about at the current juncture, our foray is in the semiconductor design. And I hope I think it will pan out in the next two to three years when we build up the various products under using this, I would say, IP-led, L&T IP-led design. And this is the success that we have, we will explore whether we go into the fab manner, but that is not in the near term.

Sure, sir. And something else like display part?

P. Ramakrishnan: At this juncture, I mean, there are various aspects we are looking at, but very difficult to comment on the progress or what is the final set will happen. So Sharma, you would like to add on this electronics parts?

No, I think like you said, it will evolve. I mean these are all new we are exploring. And we believe that the long-term potential is quite good in this sector. That's why we are entering into this. But we'll keep the options open. And as it evolves, then we will event and implement appropriate strategies, but too premature to sort of articulate on the exact plan because we have -- we are still exploring that.

Perfect sir. That's helpful. Thank you so much.

Thank you. The next question comes from Sumit Kishore from Axis Capital. Please go ahead.

[Technical difficulty] Thanks for the opportunity. My first question is in relation to markets ..

P. Ramakrishnan: Voice is not clear.

Sorry to interrupt.

P. Ramakrishnan: Sumit, your voice is breaking.

Am I audible right now?

P. Ramakrishnan: Perfect, perfect. Loud and clear.

Okay. So in case of Hydrocarbons the stage of execution of projects has been culprit in terms of margins tip for the nine-month period. So when can we expect the stage of execution given the execution itself is growing at a very swift pace? When does that cross the margin recognition thresholds? And the second part of this question is on the Infra side, where you could give us some qualitative color on how the margin improvements that we have seen in the nine-month period, how is it sort of driven by domestic/overseas because higher overseas in the mix might be depressing your headline margin? And how is domestic behaving in that margin mix?

P. Ramakrishnan: So two parts to it. One is on the hydrocarbon margins and the second is on the infra margins. So as far as hydrocarbon is concerned, I want to tell you that cumulative nine months or you take Q3, the margin accretion is over at the stage of completion of each of the businesses. The hydrocarbon margin is in line with our internal whatever benchmarks. And there are some large projects which will possibly cross the margin recognition threshold in the near term. Some of that could be in Q4 and some of that could be slipping into Q1. But as you are aware, we have given a full year margin guidance of the P&M portfolio at 8.2% and whereas nine months cumulative is 7.6% because all the three quarters, the margins have been at 7.6%. So which means that the Q4 run rate for EBITDA margin is, of course, going to be very high. And that has been -- is baked into our execution momentum and the stage of progress, okay? So I don't think the hydrocarbon margin optically dropping is an assumption that has been baked in our nine months trajectory itself. So I don't think we have any cost to worry. As far as infra margins is concerned, we have been -- we are having a good portfolio of a decent mix of renewable projects -- sorry, decent mix of renewable projects and overseas projects in the Middle East and also quite a large substantial order book in the domestic side, whereas the international projects can have optically lower margins. But I wish to tell you timely execution is enabling that we are able to fill the margins that we have bid, whereas in domestic projects, as you know, there can be time and cost overruns for reasons possibly beyond our control. So in a way, both are offsetting each other. We do not necessarily need to conclude that a larger share of domestic project execution will be higher margins or a larger share of overseas projects in the -- can possibly drop the margins. So I think the mix is good, and we should be on track to meet the margin guidance for the entire P&M portfolio at 8.2% for the full year.

Sure. And once the hydrocarbon cross the margin recognition’s assured, next year the base will become favorable for hydrocarbons. Is that the right understanding?

It can happen in Q4 and subsequent quarters. So Sumit please understand, it's not that we are executing hydrocarbon projects what we secured 1.5 years back. Some of those projects may have already crossed the margin recognition. Hydrocarbon business has also secured ultra-mega and mega orders in FY 2024 and even in the current year. So all these jobs also will get into execution over a period of time.

Yes, sure. And the four, five large contracts that you mentioned you are favorably placed are India contracts or overseas contracts?

I will just stay put here. I will say it is four or five large contracts. Let's not get into whether domestic or internal.

Sir second question is on L&T has picked up a…

It’s a decent mix, it’s a good mix.

L&T has picked up a significant stake in E2E Networks, so how are you thinking about the capital allocation, the future roadmap for E2E and the area it represents? Thank you.

So, Sumit, it is a collaborative acquisition. So we have taken 15% stake at almost INR1,080 crores. Another 6% stake is due for transfer in some time in May 2025, okay. With this it is being considered as associate -- from an accounting perspective is an associate. But essentially from a business perspective, we thought -- and as I mentioned it is a collaborative partnership where we will leverage, Larsen & Toubro will leverage E2E's scope of offerings on the AI side especially on the cloud data center, while we pitch our offerings because as you may be aware, L&T is also investing into data centers and we get into the higher end or more margin-led, we have to blend the offerings into giving cloud data services for our data center customers. So we will leverage that. And similarly E2E also will leverage our data center infrastructure to strengthen their scope of offerings. So that way it is a collaborative partnership with the strategic investment also.

Those were my questions. Thank you.

Thank you. The next question comes from Priyankar Biswas from BNP Paribas. Please go ahead.

Thanks sir for the opportunity. So my first question is on the domestic. So what we are witnessing is that a lot of EVs and those things in the state budgets particularly. So can you please elaborate like what are the areas in the domestic CapEx where you specifically see -- if you can break down from central, state, CPCs like which areas we should see growth from?

P. Ramakrishnan: In terms of -- okay as I talked about the total order prospects of INR4 trillion of infrastructure, a major part is coming out in domestic itself. So we have -- actually it's -- that way a wide I would say canvas of opportunities across various segments. To keep it simple let me talk about the buildings both led private sector and also at the central level. There are various opportunities for public health, which means I'm talking of hospitals. There are opportunities on some large projects on the hydrogen side. And I also want to tell you that there is a major set of urban infrastructure connecting between two cities not necessarily -- I'm not talking of railways, I'm talking of road networks elevated corridors that are expected to get tendered out in the near-term. So it's a combination of state and central-led projects, largely states I would say. And the share of the government prospects would be almost 75%, whereas, private sector prospects, which covers the typical real estate and other data centers and so on that is almost 25% of the overall prospect share.

If I may just add in. So how...

P. Ramakrishnan: It does not tilt to any specific sector. I think it's a decent mix of energy of urban infrastructure, of, I would say also water related investments, and everything else, that comes in and even metals, but that comes under the 25% share, private sector. Yeah, go ahead, Priyankar.

Yes sir. Sir, just adding on to this, so what is your outlook for that Defense space? Because we see the prospect that you gave for High Tech, it seems to be quite low. So aren't you really constructive on the Defense CapEx? That's my question.

P. Ramakrishnan: So we are very much constructive on the defense CapEx Priyankar, but I am going as the order prospects what we believe is going to get tendered out in the next three months. So defense prospects are -- doesn't mean that defense prospects that are addressable, defense prospects in the country, is coming down. Incidentally as I told you the Q3 we had the benefit of a very large that Vajra repeat order is almost INR 6,500-odd crores. So this year we have always managed to get a print of INR 12,000 crores of orders in the nine months for the PES business which is the defense part of the business. We don't see any immediate prospect for the next...

And defense orders take time to conclude.

Okay. And sir, if I can squeeze just one more in, so what I see is we have a healthy order book in the region. So going forward I guess the international share in the revenues will also rise up, as we go into the subsequent quarters. So what should be the general direction you can give the margin and the working capital trajectory from here on?

P. Ramakrishnan: So Priyankar, I think I have answered this kind of a question for the previous people who had asked. Let me tell you the margins what we are giving is for the current year update, okay? As we get into next year, in the month of May, we will be giving you the outlook of margins of the P&M portfolio, after we complete this year and the budgets for the next year.

Okay sir. That's all from my side.

Thank you. The next question comes from Atul Tiwari from JPMorgan. Please go ahead.

Yes. Thanks a lot. Just one question on the pace of execution [indiscernible], so lately we have seen some outbound reports about budget constraint in Saudi Arabia and some of the projects being deferred, so for your projects have you seen any discussion on the customers' part about deferrals delays, delays in payment or anything of that sort?

P. Ramakrishnan: You're referring to only, Middle East?

Yeah. Only Saudi Arabia, sir.

P. Ramakrishnan: Yeah. Yeah. I mean, no, we have not seen actually. In fact, we continue to see a good pipeline. There have been some slowdowns in maybe non-priority projects. And I think there is some amount of reprioritization of capital allocation. But in the sectors we are in which is oil and gas and carbon capture and petrochemicals, I mean those remain -- continue to remain the top priority. And we have a pretty large presence in gas development which is the highest priority for the country -- for the Kingdom. So we don't -- we are not seeing slowdown. In fact, we are not seeing any slowdown in payments. I mean I was going to comment on the previous question that the difference in the international and domestic is that the payments are much more prompter and working capital is generally better compared to domestic, but we are not seeing any slowdown on those.

Yes sir. Good to know. Thanks sir.

Thank you. The next question comes from Shrinidhi Karlekar from HSBC. Please go ahead.

Hi. Thank you for the opportunity and congratulations on strong performance. Sir my first question is on the CarbonLite business. Here we see that order inflow for the segment is about INR 234 billion, does that include entire four gigawatt of ultra-mega plants that you book or there is some portion that's not included in that?

P. Ramakrishnan: It includes everything.

Right. So sir in that case is that right that ordering per megawatt is about INR 5.5 crores which looks quite aggressive?

No. I don't think sir your calculation is right. It is higher than that. When the results have been declared I think it was...

P. Ramakrishnan: It is in the public domain.

Public domain. It is upwards of six -- even I don't remember the exact number, but you can check that.

P. Ramakrishnan: This is for the two projects?

This is only for four gigawatts, yes.

Four gigawatt and the order inflow is INR 23000 crores right in that segment? So some of the portion that Boiler JV is...

P. Ramakrishnan: But this is only the BTG, right? I mean this is only for BTG. You have to see this. This is not full EPC. Normally maybe you're used to entire EPC because the balance of the plant is still not included in this.

Right. So, it's just the BTG part, right?

P. Ramakrishnan: Correct.

Okay understood. And sir in the same order, how should one think about the EBITDA that will be captured in the consolidated business considering I'm presuming that some of the EBITDA will be captured in the JVs as well?

P. Ramakrishnan: These orders have been procured by Larsen & Toubro Limited as the BTG EPC contractor and in-sourced to the Boiler and the combined JVs. And large part of the margin will come to the group level only.

But it is -- I mean it will accrue only later, now this jobs that's just been awarded. So, it will take some time for it to reach the threshold.

Understood. And sir one question on the Middle East. Would it be possible to comment on what are typical retention money clauses are there in the oil and gas order that the company is winning?

Typically I think the retention is not much. I mean I think we have been negotiating all our commercial terms in such a manner that we maintain either neutral or slightly positive cash flow across the Board and we have been quite successful in doing that. But sometimes you have maybe 2.5%, 5% of the contract linked to certain milestone and milestones. But overall, the cash flow situation is pretty good. I mean I think most of them we are running at positive cash flow.

P. Ramakrishnan: This is the contracts that we have got. Shrinidhi I want to tell you that we don't expect -- as and when the projects get complete in the balance sheet there will be a large amount of retention which is not the case like in any other segment possibly in India or any other country. So, the payment terms are favorable.

Right. I understand they are definitely favorable. They're also favorable at the end as well, right?

P. Ramakrishnan: Yes generally.

I mean across the project timeline.

Understood. Nice to know that and thank you and all the very best.

Thank you.

Thank you. The next question comes from Parikshit Kandpal from HDFC Securities. Please go ahead.

Hi sir, congratulations on a good quarter. So, earlier in the call you mentioned there are some slow-moving orders where there was execution issue because of collection. So, in which segment are you facing these challenges? And how much would have been the revenue impact of this?

P. Ramakrishnan: Okay. So, in the Infrastructure segment, we have had -- I mean there has been because of the funds that had been stopped for some time with respect to water projects funded under the Jal Jeevan mission. So, there were some amount of stoppages. But now we expect the fund flow momentum to start through from -- I think it has already started from December onwards and we'd expect a revival in momentum to happen. It would be very difficult to compute how much -- because of delay in payments how much of revenues we have lost. That won't be -- it won't be an accurate answer to put it across like that.

Okay. And sir in this quarter were there any one-offs in the EBITDA line because we have seen decline in margins both quarter sequential as well as Y-o-Y. So, I know you touched upon some NPAs and something on IT. So, if you can give some more color like why there was a drop?

P. Ramakrishnan: So, there is no one-off in the entire P&M portfolio as far as Q3 margins are concerned. It is normally as what is in any project part of the business. In terms of stages of execution we have not had any one-offs.

So, what explains the decline in the EBITDA margins Q-on-Q and Y-o-Y?

P. Ramakrishnan: No. On a Y-on-Y basis, at the P&M level, we have kept it at 7.6%, 7.65%.

Overall.

P. Ramakrishnan: Okay. At the group level, I think I did cover when you talked about the EBITDA margin at a group level, the drop is because of two reasons. The one is the revenue is tilted -- the composition of revenue is tilted towards a lower margin P&M portfolio as compared to in the previous year a higher margin IT&TS portfolio. So, that is one. That is contributing to almost 30 basis points in the drop for the group operating margin. And the second one is the operating leverage of the IT&TS company that is in terms of their margins has come down. That had another 40 basis point impact. Am I clear Parikshit? So, the fall in the EBITDA margin at the group level is for two reasons. a larger share of revenue growth coming from a lower margin trajectory of the P&M portfolio which is almost 30 basis points and the lower margins in the IT&TS portfolio which is attributing the 40 basis points.

Basically, the growth rate of IT&TS has been less than the core business and their margins also.

P. Ramakrishnan: Our revenues for the quarter at the group level has grown by 17%, okay? Whereas I did say that in the IT&TS segment the revenues have grown by 8%. So there is a relative rebalancing there. That's the reason for the drop in the EBITDA margin at the group.

Okay. And sir, the other thing is you mentioned on the reducing losses in the metro. So, and you attributed it to the loan repayment. So did you receive any support from Telangana government? So what has been the quantum? Any change versus last quarter?

P. Ramakrishnan: So the last time we received was almost last year. So the cumulative support that we have received on the INR 3000 crores loan support, which was approved by the Government of Telangana we have received INR 900 crores odd in the last year. We do expect some things to come up in the near-term the balance portion of INR 2,100-odd crores. And the other part is that, we also are looking at very, very aggressively a further amount of some transit-oriented development monetization. Hopefully, the approval should be coming up in the near-term possibly even in Q4. Let us do that wait and watch. So an aggregate of this INR 2,100 crores of additional loan the soft loans from the government and also TOD monetization will enable us to reduce the current debt levels. The third-party debt levels in the metro is almost INR 12,600-odd crores. We do expect over a period of time that to come down to say INR 9,000 crores or so which will enable a further reduction in the interest cost.

And sir, the last question on the real estate business sir. So how much has been the new sales booking or pre-sales for nine months and for third quarter FY 2025?

P. Ramakrishnan: So the total nine months booking has been in the range of INR 2,500 crores of order inflow and nine months revenue for realty is almost INR 1,500-odd crores.

Okay. Thank you.

Thank you. The next question comes from the line of Bharanidhar Vijayakumar from Avendus Spark. Please go ahead.

Yeah. Good evening. Sir, can you tell out what proportion of order book is fixed price in nature at this point in time?

P. Ramakrishnan: 45% is fixed price balance is renewable.

Okay. And some of these recent large orders both in renewables are in the hydrocarbon are in the thermal side they would all be on a cost through basis?

Most of the orders in hydrocarbon and also in thermal are fixed price.

Okay, okay. That is why it has increased to 45%. Okay.

Thermal may not have price adjustment, but I prefer a very selected commodities linked, while in hydrocarbon it's all fixed price. Thermal we have some price adjustment for a particular component.

Okay, okay. Got it. Just for clarity on the EBITDA margin our expectation for the full year FY 2025 in the core business or in the P&M business that's 8.2% is what you mentioned right?

P. Ramakrishnan: Correct, correct.

My final question is on the Nabha Power. So what is the status of asset monetization there.

P. Ramakrishnan: The asset is doing well. So the asset is doing fairly well. It gives us almost INR 100 crores to INR 110 crores of profits every quarter. And it is one of the best performing plants. And of course, we are looking at -- but the point is it should be something which we believe should be a fair valuation. We can look at it. Otherwise at this juncture it is a part of our portfolio.

Okay. No, because it will be good to get bids when the deal is done. So of course, we have the idea of monetizing it that's why.

P. Ramakrishnan: Correct, correct. So we are not saying that we are not looking at options but we are looking at valuations which we feel should be appropriate considering that, it is one of the best performing plants in the country and having some sort of a clear visibility on earnings and profitability.

Understood, sir. Thank you. All the best.

P. Ramakrishnan: Thank you.

Thank you. The next question comes from Amit Mahawar from UBS. Please go ahead.

Yes. Hi, PR. I have two quick questions for Mr. Sarma. Sir, on Middle East, particularly, we had a very strong ordering that we saw in the last two years. Incrementally seemingly Infra is more a bigger pipeline than Hydrocarbon for us where a lot of Chinese and non-Korean, non-European competition comes for us. So do we think the incremental returns on capital employed in incremental Middle Eastern orders might be -- I'm not saying not great, but relatively inferior to what we saw in the last two years? That's my first question, sir.

No, I think we have not seen much change in terms of bidding pipeline or in terms of competition. Yes, of course, sometimes in certain Infrastructure projects or even Hydrocarbon projects, we see Chinese but we are also quite selective. And those which we are targeting, I think we believe that we have a fair competition and we are able to secure jobs with the levels what we would like to have. I mean that's how it played out. I mean the addressable market is quite large for everyone to have their share. So, I don't see that as a big issue.

Q – Amit Mahawar: Sure. Very comforting. And second and last question is when we speak to some of the Korean companies like Hyundai, Samsung, and we talked to many people in the market, them taking 20%, 30% more orders in the Middle Eastern region on the current base that they're executing, you need man, money and material. And man is the most critical part in that region, right. Money material is easy to get relatively. Do you think L&T in 2026 can bag 20%, 30% higher orders in the Middle East in terms of -- is it possible you have capacity to execute there in terms of -- if I go by the manpower availability, because your execution run rate in 2025 is very heavy, 2026 even will be heavy, the book you have. So can we take 25%, 30% more orders in the Middle East in FY 2026, sir? Thanks.

Amit, we will decide that as that will be part of our budget planning exercise now. And when we are completed with this and when we approach the first quarter then we will share more details. But in principle, I think see we are -- these two markets are becoming our important markets. So we look at each -- every opportunity available to us very seriously critically our ability to execute. And we have also strategies in place, like, if there are constraints we work continuously in overcoming those constraints, maybe like manpower you spoke about. We also have a great relationship with some of the large sub-contractors in ultra-mega projects. One of the ultra-mega projects, we have a very good sub-contracting strategy and we are working with one of the largest construction contractors who have access to a large number of pools. So we do a bit of a blend here hybrid model we follow. So we, generally, see through these issues and work through those issues and prepare ourselves. But at the end of the day, I mean we'll have to balance it, and we'll have to be selective. And at the same time, chase those opportunities which will provide us the required growth rate.

Q – Amit Mahawar: Sure. Good luck, sir Sarma and the team.

Thanks.

Ladies and gentlemen, that will be the last question for today. I would now like to hand the conference over to Mr. P. Ramakrishnan for closing comments.

P. Ramakrishnan: Thank you everyone for attending this call. It was a pleasure to interact with all of you. Good luck and wishing you all the very best. Thank you once again.

Thank you. On behalf of Larsen & Toubro Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.