Larsen & Toubro (L&T), a prominent civil construction company, saw its shares rise 1% to reach Rs 2,240 in Thursday’s intra-day trade, despite a generally subdued market. The stock continued to rise for the third consecutive day, gaining 3% due to orders worth Rs 9,500 crore.
L&T’s construction arm won significant orders ranging from Rs 1,000 crore to Rs 2,500 crore for water and effluent treatment, as well as buildings and factory businesses. The Drinking Water & Sanitation Department, Government of Jharkhand, awarded a repeat order to L&T Construction to execute a raw water transport system, while the company’s building and factories business secured an order to construct residential towers in Bengaluru.
L&T Energy Hydrocarbon also secured major contracts ranging from Rs 5,000 crore to Rs 7,000 crore for multiple offshore packages from a prestigious overseas client. The scope of work comprises EPC & installation of offshore structures and upgradation of existing facilities. However, the exact value of the orders was not disclosed by the company. As per L&T’s project classification, the major value of the contract is between Rs 5,000 crore to Rs 7,000 crore, while the value of a significant project is between Rs 1,000 crore to Rs 2,500 crore.
Furthermore, L&T entered into an electrolyzer manufacturing binding agreement with McPhy Energy, a leading French-based electrolyser technology and manufacturing company. Under this partnership, McPhy will grant an exclusive license of its pressurised alkaline electrolyzer technology to L&T for manufacturing electrolyzers, including future product upgrades. L&T plans to set up a Gigawatt-scale manufacturing facility for electrolyzers based on McPhy technology in India to serve the domestic requirements as well as cater to other selected geographies.
L&T’s total ordering prospects/pipeline for Q4FY23E is at Rs 4.87 trillion, comprising Rs 3.82 trillion of domestic and Rs 1.05 trillion of international pipeline. With a strong order inflow of Rs 1.54 trillion for 9MFY23, ICICI Securities expects L&T to achieve revenues and EBITDA CAGR of 15.1% and 16.6% respectively over FY22-25E.
L&T, with its experience and track record, is well-positioned to be the key beneficiary of capex upcycle driven by investments in both public and private sectors, and the AtmaNirbhar Bharat scheme. The company’s diversified businesses across sectors such as infrastructure, heavy engineering, hydrocarbons, defence, IT as well as green energy make it the best proxy for domestic capex upcycle. ICICI Securities noted that L&T’s proposed agreement with McPhy is in line with its strategic vision to be present across the green energy value chain and increase the share of new business areas such as hi-tech manufacturing.