Financial Projections for Q2 FY25 - Larsen & Toubro Limited
1. Basis for Projections
The projections for Q2 FY25 are based on the historical financial data up to Q1 FY25, management's guidance from the latest earnings call, recent announcements, and industry trends. Key factors considered include:
- Management's revenue growth guidance of 15% for FY25.
- Expected improvement in domestic execution due to better labor availability and favorable weather conditions in Q2.
- Historical quarter-on-quarter (QoQ) growth patterns.
- Strong order book and healthy prospects pipeline.
2. Assumptions for Q2 FY25 Projections
- Revenue Growth: Projected a 9% QoQ increase in revenue, considering improved domestic execution and continued international momentum.
- Gross Profit Margin: Assumed stable gross profit margins due to effective cost management and execution efficiencies.
- EBITDA Margin: Expected slight improvement due to operational efficiencies and cost-saving initiatives.
- Interest and Depreciation: Assumed similar levels as Q1 FY25.
- Tax Rate: Maintained consistent effective tax rate as observed in previous quarters.
3. Summary of Projected Financials for Q2 FY25
| Metrics (₹ Crore) |
Actual Q1 FY25 |
Projected Q2 FY25 |
QoQ Change (%) |
| Revenue |
55,119.82 |
60,081.60 |
+9.0% |
| Gross Profit |
13,553.81 |
14,773.66 |
+9.0% |
| EBITDA |
7,045.82 |
7,900.95 |
+12.1% |
| Profit Before Tax (PBT) |
4,676.65 |
5,530.78 |
+18.2% |
| Profit After Tax (PAT) |
2,785.72 |
3,280.62 |
+17.7% |
4. Assumptions Used in Forecasting and Underlying Risks Involved
4.1 Assumptions
- Revenue: A 9% QoQ increase based on improved domestic execution and a strong order book.
- Cost of Goods Sold (COGS): Proportional increase in COGS with revenue, maintaining stable gross margins.
- Operating Expenses: Controlled growth in operating expenses due to cost-saving measures.
- Interest and Depreciation: Maintained at levels similar to Q1 FY25.
- Tax Rate: Effective tax rate assumed at approximately 26%, consistent with previous quarters.
4.2 Underlying Risks Involved
- Economic Slowdown: Any unexpected slowdown in domestic or international markets could impact revenue growth.
- Execution Delays: Potential delays in project execution due to unforeseen circumstances like labor shortages or supply chain disruptions.
- Cost Inflation: Increase in raw material prices or operational costs could affect profitability margins.
- Regulatory Changes: Changes in government policies or regulations could impact project timelines and costs.
- Global Factors: Geopolitical tensions or global economic uncertainties may affect international operations.
5. Conclusion
Based on the current trends, management's positive outlook, and strong operational capabilities, Larsen & Toubro is projected to exhibit solid financial performance in Q2 FY25. However, the projections are subject to the assumptions made and inherent risks in the business environment.