Larsen & Toubro Sees Private Capex Revival Aiding Order Inflows: CFO

The growth in capital expenditure (capex) by the private sector even as the government spurs spending on infrastructure is a positive for companies such as Larsen & Toubro (L&T), its chief financial officer (CFO) R Shankar Raman told Business Standard.

“We've been seeing a steady uptick in the ordering momentum for a few quarters now," Raman said on the order inflows for L&T.

The October-December period or Q3 of FY23 saw L&T's consolidated order book touch Rs 3.86 trillion, which was an all-time high, growing 14 per cent over the year-ago period.

“At the end of the December quarter of 2022, we were at 25 per cent share of private sector orders in our total order book of Rs 3.86 trillion. A year ago, that share was 20 per cent. Evidently, there have been a select set of industries that have driven these order inflows in the last four quarters. This includes metals and mining, energy transition such as solar power and segments such as airports and data centres,” Raman added.

An uptick in the share of private orders for L&T, considered a bellwether for the economy, is an encouraging sign, said sector experts.

The government has cut corporate taxes and is offering incentives to boost private investments and domestic manufacturing.

At the same time, the push on public spending on infrastructure is a further endorsement of the path the government wishes to take in the future, Raman said.

On Wednesday, the government announced a 33 per cent jump in public capex to a little over Rs 10 trillion in the Budget for 2023-2024.

“The overriding theme in my mind is that the government is seeking growth through a virtuous investment cycle rather than waiting for consumption to generate demand. The idea is to keep the momentum going on public infra spending, which has a multiplier effect. That will spur growth, employment and demand," Raman said.