L&T executives claim that the Rs 35,000 crore Saudi Aramco order is the largest ever

Senior executives from Larsen & Toubro (L&T), an engineering conglomerate, addressed reports of a new order win from Saudi Aramco and confirmed that it is included in their current order book.

"This order win, worth over Rs 35,000 crore, was announced to the exchanges earlier (in FY24)." Subramanian Sarma, whole-time director and president (energy) at L&T described the event as a formal ceremony to gather all the contractors and officially assign them the work, highlighting that it is the largest order the company has ever received.

The closing price of L&T's stock in Tuesday's trading session was Rs 3,624.25, showing a 2.74% increase mainly due to expectations of winning a new order. Sarma specified that the order is included in L&T's previously disclosed backlog of Rs 4.75 trillion as of March 2021.

Despite this, Sarma is optimistic about receiving new orders from West Asia. We have been searching for numerous significant projects both upstream and downstream. He stated that he believes our potential sales opportunities are promising. FY24 saw a significant increase in orders from the Middle East, but this fiscal year will increase West Asia's order backlog, not incoming orders.

In the last year, Saudi Arabia, especially Saudi Aramco, has played a significant role in boosting L&T's order book. In March, 38% of L&T's order inflow totaled Rs 3.02 trillion, and 35% of the company's order book amounting to Rs 4.75 trillion originated from West Asia. Around 92 % of its Rs 1.81 trillion international order book came from West Asia. This significant contribution, combined with Saudi Arabia's conservative stance on new investments, has caused analysts to become doubtful about L&T's prospects in West Asia.

Regarding the feedback received from the Saudi Aramco event and their investment sentiment, Sarma mentioned, "They are making investments." There is no observed shift in the sentiment. There is no important thing that we need to be concerned about.

Regarding potential orders in the renewable sector, Sarma remarked, "There are promising opportunities for international orders."

He mentioned that the company's plans for green hydrogen are progressing well, with a growing momentum in terms of various tenders, mainly within the country. He stated that the government has issued multiple tenders, and L&T is taking part in them. He added that in the upcoming three months, or roughly that timeline, they are optimistic about achieving some victories.

L&T is engaging in these bids with its tripartite partnership involving Indian Oil Corporation and ReNew. Sarma also verified that the three-party project has been granted land at the Kandla port on the western coastline.