 "Rs 35,000 crore Saudi Aramco order biggest ever, say L&T executives")
Senior executives from engineering conglomerate Larsen & Toubro (L&T) on Tuesday clarified on news reports of a new order win from Saudi Aramco, and said the order is part of its existing order book.
“This was a more than Rs 35,000 crore order win, which we reported to the exchanges earlier (in FY24). What happened now was a ceremony to call all the contractors and hand them over (the work) in a formal way,” said Subramanian Sarma, whole-time director and president (energy), L&T, adding it is the biggest order win ever for the company.
L&T’s share price in Tuesday’s trade closed at Rs 3,624.25, up 2.74 per cent, largely driven on the assumption of a fresh order win. Sarma clarified that the order is part of L&T’s already reported outstanding order book of Rs 4.75 trillion as of March this year.
Sarma, however, remains positive about the prospects of new orders from West Asia. “We have been looking for quite a few large projects in both upstream and downstream. So, I think, our prospect pipeline is still looking good,” he said, adding while FY24 was a “steep” year in terms of order wins from the Middle East, the current financial year will show a positive Year-on-Year (Y-o-Y) growth in West Asia’s order book, not order inflow.
“I'm quite optimistic that we'll have a healthy order inflow for this year as well. There will be a growth in the order book because what I will burn in this year in terms of revenue, I will have more order inflow to add more to the order book,” he added.
Saudi Arabia, and Saudi Aramco in particular, has been a significant contributor to L&T’s order book in the past one year. As of March, 38 per cent of L&T’s order inflow of Rs 3.02 trillion and 35 per cent of the conglomerate’s order book of Rs 4.75 trillion were from West Asia. Of its international order book of Rs 1.81 trillion, around 92 per cent was from West Asia. This huge contribution, coupled with Saudi Arabia’s own cautionary approach towards fresh investments, has led analysts to turn skeptical about L&T’s West Asia prospects.
In terms of his feedback from the Saudi Aramco event and their investment sentiment, Sarma said, “They are investing. We do not see any change in the sentiment. There is nothing significant that we should be worrying about.”
As regards order prospects in the renewable segment, Sarma added, “We are seeing a good prospect for orders on the international side.”
For the company’s green hydrogen plans, he said: “Green hydrogen activities have increased, there is a momentum picking up in terms of several tenders, mostly in domestic.” He added that several tenders have been floated by the government, and L&T is participating in them. “So, in the next three months or so, hopefully, we'll have some wins,” he added.
L&T is participating in these tenders through its tripartite joint venture with Indian Oil Corporation and ReNew. Sarma also confirmed that the tripartite venture has been awarded land at the Kandla port on the western coast. He added, “Work is moving and we're looking for some discussions with some of the international companies.”
L&T’s FY24 order tally
> Outstanding order book: Rs 4.75 trillion*
Of which, West Asia comprises 35%
> New order wins: Rs 3.02 trillion
Of which, West Asia comprises 38%
*As of March 31
Source: Company presentation