L&T extends gains, up 3% in three days on securing orders worth Rs 9,500 cr

Shares of Larsen & Toubro (L&T) were up 1 per cent at Rs 2,240 on the BSE in Thursday’s intra-day trade in an otherwise subdued market. The stock of civil construction company traded higher for the third straight day, gaining 3 per cent during the period, on winning orders worth of Rs 9,500 crore.

In comparison, the S&P BSE Sensex was up 0.07 per cent at 58,257 at 10:29 AM. L&T hit a record high of Rs 2,297.30 on January 20, 2023.

L&T on Wednesday said its construction arm has secured significant orders (ranging from Rs 1,000 – Rs 2,500 crore) for its water & effluent treatment and buildings & factory businesses.

L&T Construction has secured a repeat order from the Drinking Water & Sanitation Department, Government of Jharkhand to execute a raw water transport system on a turnkey basis from the proposed intake at Neghra, Rajmahal in Sahibganj district to Sundar Dam in Godda district.

The building & factories business of L&T Construction has won an order from a reputed developer to construct residential towers in Bengaluru. The project is to be executed within stringent timelines, the company said.

Earlier, L&T on Tuesday announced the hydrocarbon business (L&T Energy Hydrocarbon) of the company has secured major (ranging from Rs 5,000 crore to Rs 7,000 crore) contracts for multiple offshore packages from a prestigious overseas client. The scope of work comprises EPC & installation of offshore structures and upgradation of existing facilities.

The company did not disclose the exact value of the orders. As per L&T’s project classification major value of contract is between Rs 5,000 crore to Rs 7,000 crore. The value of significant project is between Rs 1,000 crore to Rs 2,500 crore, as per L&T.

Meanwhile, on another development L&T has entered into an electrolyzer manufacturing binding agreement with McPhy Energy, a France-based leading electrolyser technology and manufacturing company, for a long-term partnership to explore the opportunities unfolding in the emerging Green Hydrogen market. Under this partnership, McPhy will grant an exclusive license of its pressurised alkaline electrolyzer technology to L&T for manufacturing of 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 the other selected geographies.

The proposed agreement is in line with L&T’s strategic vision to be present across the green energy value chain and increase the share of new business areas like hi tech manufacturing, ICICI Securities said in a note.

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 with order backlog of Rs 3.87 trillion and improving margins ICICI Securities are expecting L&T will achieve revenues and EBITDA CAGR of 15.1 per cent and 16.6 per cent, respectively, over FY22-25E.

L&T, the engineering behemoth, with its decades of experience in engineering & construction and robust track record is well poised to be the key beneficiary of capex upcycle driven by investments in both public and private sectors.

Over the long term, L&T remains at the forefront to reap benefits from the AtmaNirbhar Bharat scheme with its diversified businesses across sectors such as infrastructure, heavy engineering, hydrocarbons, defence, IT as well as green energy. The company is the best proxy for domestic capex upcycle, the brokerage firm Sharkhan said.