Larsen & Toubro shares Surge as Hydrocarbon Business Commands Major Contract


Shares of Larsen & Toubro (L&T) moved up by close to 3 percent to Rs 2,228.90 on the Bombay Stock Exchange (BSE) in Wednesday’s trading after the company was awarded flagship orders for its hydrocarbon engineering business. The value of the contract was not revealed, however, according to their classification, a mega project is usually valued at over Rs 7,000 crores.

The project scope for the hydrocarbon arm of Larsen & Toubro is comprised of engineering, procurement, construction, and installation for several new offshore facilities, with integration of existing installations. This form of contract award is set to drive the company’s growth as they plan to reach their five-year Lakshya 26 strategic plan.

Larsen & Toubro are thus far well-performing in the current year 2023, with their shares increasing by 6.5 percent on the BSE Sensex versus the 2.7 percent decrease in the S&P BSE Sensex. The company mainly operates in the infrastructure, heavy engineering, defence engineering, power, hydrocarbon, and services business segments where their infrastructure and services segments contribute 45 and 30 percent respectively tot their overall revenue.

Additionally, Larsen & Toubro have been making investments in green energy, cell and battery manufacturing, the development of data centres, tech education, and B2B e-commerce, which are encompassed in the Lakshya 26 vision. As for their Hyderabad metro project, their ridership increased to 394k per day from 355k in Q2FY23. Moreover, the company has also gained assistance from the Telangana government in the form of Rs 100 crore which is set to increase to Rs 900 crore in Q4FY23 as per HDFC Securities.

HDFC Securities have maintained a ‘Buy’ rating on Larsen & Toubro with an increased target price to Rs 2,432/share on account of the record-high order book (OB) of Rs 3.9 trillion, bottoming out of infrastructure margins, and improvements on their Hyderabad Metro project.

About Larsen & Toubro:
Larsen & Toubro (L&T) is an Indian multinational engineering and construction company, operating in the infrastructure, heavy engineering, defence engineering, power, hydrocarbon, and services business segments. Headquartered in Mumbai, they are amongst the largest companies in India through their market capitalization. They are led by the Chairman of A.M. Naik, who has been a part of the organization since 1965.

About Mr. A.M. Naik:
Mr. A.M. Naik is the Chairman of Larsen & Toubro and has been a vital individual in the growth and progress of Larsen & Toubro since his joining in 1965. During his remarkable tenure, he has been recognized with several global awards, honors and accolades. He is the recipient of Global Indian Icon of the Year award at the Global Indian Business Meet and he has also been bestowed with the Padma Bhushan in 2018. He has also been awarded with Professional Achievement Award from the UNESCO Madanjeet Singh Institute of South Asian Regional Cooperation.