L&T gains 1% on partnership with Spain’s Navantia for Navy submarines

Larsen and Toubro (L&T) shares gained more than 1 percent in early trade on July 11 after it signed a teaming agreement with Spain’s Navantia for the Indian Navy’s P(75) submarine programme.

At 9:23am, L&T was quoting at Rs 2,473 apiece, trading 1.4 percent higher than the previous day’s close on the National Stock Exchange. In the last six months, the stock has gained 15 percent.

Originally conceived in 1997, the P(75) programme is a military acquisition initiative affiliated with the Ministry of Defence (MoD) to procure diesel-electric submarines for the Indian Navy. The submarine programme is the country’s largest defence acquisition, valued at roughly €4.8 billion.

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The project necessitates the Indian bidder to establish a partnership with a foreign collaborator (FC) and carry out the programme to deliver six conventional submarines equipped with Air-Independent Propulsion (AIP), while meeting the targetted goal of Indigenous Content. L&T and Navantia signed an MoU for the programme on April 11, 2023 in Madrid, which has been converted into this TA.

Navantia would carry out the design of P (75) submarines based on its S80 class of submarines, the first of which was launched in 2021 and is undergoing sea trials prior to its delivery to Spanish Navy at the end of 2023, L&T said in a disclosure to the stock exchanges on Monday.

L&T’s Chief Executive Officer and Managing Director SN Subhramanyan said that the company is committed to providing the most contemporary solution for the Indian Navy’s requirements at a competitive price.

“We believe that there is a possibility of giving the contract to both L&T-Navantia and Mazagon-TKMS (three submarines each) considering the need for faster procurement of AIP-equipped submarines from the Indian Navy,” ICICI Direct said. “A few days back, L&T and DRDO had also signed a contract for refitment of two AIP system modules for existing Kalvari class of submarines.”

Navantia is a Spanish state-owned shipbuilding company, which offers its services to both military and civil sectors.

In late June, L&T announced that its distribution and power transmission business received significant orders ranging between Rs 1,000 crore and Rs 2,500 crore. The orders are from the Middle East to enhance electrical networks in major industrial establishments.

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