How do you see govt capex versus private capex for order inflow?
The government will continue to be an important spender, but the private sector will gather pace. I think the share of private capex in our order inflow has moved to 32% from about 25-28% of the previous year. So statistically speaking, there is a move up. So, we also analysed whether it is a broad trend or is it someone off that has happened. What we realised is this migration to energy transition to renewable. I think India Inc has repaired its balance sheet after a lot of trouble. And I think the lessons learned are still fresh in people’s minds. So, they’re not recklessly investing in capacity. They’re reassessing what needs to be done, given the steadiness of oil prices. The private sector investment will move up. I don’t see this 25-30%, just jumping to 50% and 75% overnight.
What would be L&T’s capex for FY24?
It’s not going to be a very capital-intensive year in FY24. We would be investing around ₹5000-6,000 crore in total. We will continue to invest close to ₹3,000 crore on critical equipment because the projects would require dedicated equipment. We are also investing ₹1,000 crore in building an electrolyser plant of 1 GW in Gujarat.
We’ve tied up the technology with McAfee and the plant is under construction. I think in FY24 we will complete the plant. The other thing that we are investing in is a data centre. We do think that there is considerable opportunity that is available for localisation of data. So a data centre is something that we’re building on. We’re building about 30 MW now and roughly about another ₹1,000 crore is what we will invest in FY24 for putting this data centre.
So, how will you be financing this? Through internal accruals?
Our balance sheet is strong and generates adequate cash. So, we do not need to raise funds. In fact, we are looking to pare down borrowing in FY24. We have a very low debt equity of 0.2%. Also, I think the cash is available for shareholders to benefit.
We have progressively, in a phased manner, stepped up our dividend outflows. Also, as and when the timing is right, to get the approvals for possibly a buyback, because if there is no large capital programme that we are doing and we are not really looking at big acquisitions, we can return value to shareholders and that is also an important lever for us to improve our ROCE.
