L&T expects challenges to achieve full year margin target

However, commodity prices have seen a correction from elevated levels. L&T expects the benefits of procuring material at lower rates to reflect in the company's margin in financial year 2024.

Raman said that the growth anticipated for this financial year may prove to be a challenge but they have not given up on achieving that target. "We are trying to get all aspects of execution done well so that we can do some amount of recoupment," the CFO said.

L&T recently obtained permission from the government for interest-free, long-term loans worth Rs 3,000 crore. L&T received the sum this quarter, which will be utilised in bringing down the debt of the Hyderabad Metro.

Shankar Raman called Hyderabad Metro a good project, just that the capital structure of the project was not in-line with the ridership trends.

"Rs 13,000 crore debt with 4-4.5 lakh people traveling on the train everyday is a little unsustainable," he said, adding that the company is aiming to bring down the debt to levels of Rs 8,000 crore.

L&T has also secured permission from the government to monetise some of the land parcels associated with the Hyderabad Metro, which will also help in bringing down the debt. A portion of the land parcel will be sold in the current financial year but Raman believes that the complete restructuring will take at least 12-18 months.

Larsen & Toubro is looking to completely exit its road assets. It holds these road assets through a stake in its subsidiary IDPL.

CFO Raman said that the company is getting a "fair value" for the road assets that it is exiting, without sharing more clarity on a specific number.

The company is hopeful of signing the divestment documents by the end of the year. The divestment is also subject to approval from various authorities. Subject to approvals, the deal is likely to be consummated by March 2023 or a month thereafter.

L&T recorded orders worth Rs 51,914 crore during the September quarter at the group level, registering a growth of 23 percent from last year.

The company won orders across multiple segments like public spaces, nuclear power, irrigation, ferrous metal, health, renewables, and refinery sectors.

At Rs 17,341 crore, international orders formed a third of the total order inflow during the quarter.

L&T's total consolidated order book as of September 30 stood at Rs 3.72 lakh crore.

CFO Shankar Raman said that the states have been sluggish in placing orders and have consumed only 20 percent of their budgetary plan.

International orders make up for 28 percent of the overall order book. The robust order flow in the Middle East is offsetting any sluggish activity domestically. Fertilisers, refinery expansion and mineral and metals sector in the Middle East is doing well, according to L&T's CFO.

Increasing order traction is seen particularly in Saudi Arabia. L&T sees opportunities in Saudi within the renewable energy, power transmission, and water space.

"All of this gives us a good counter-balance to the possible shortfall that could happen in the state spends within the domestic market," he said.

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Shares of L&T have recovered from the day's low and are trading 0.5 percent higher at Rs 2,032.8 as of 12:10 PM.