Larsen & Toubro snaps up nearly $4 billion order from Saudi Aramco
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Engineering conglomerate Larsen & Toubro (L&T) has secured a multi-billion-dollar contract from Saudi Aramco, according to informed sources. A West Asian business intelligence website estimated the total value of the order at $3.9 billion.
According to MEED (formerly Middle East Economic Digest), L&T is one of the three contractors to win different packages for Saudi Aramco’s $10 billion expansion at its Jafurah unconventional gas production project in Saudi Arabia.
L&T has been chosen as the contractor for Package 1, valued at $2.9 billion, and Package 3, worth $1 billion, according to the MEED report.
“Aramco has awarded the project to L&T,” confirmed a source, although specific project value details were not divulged.
With a combined value of $3.9 billion (equivalent to Rs 32,455 crore at an exchange rate of Rs 83.22 per US dollar), this represents one of L&T’s largest order wins in recent history in value terms.
To provide context for the magnitude of this latest order win, during the entire three-month period ending June 2023, L&T reported total order wins amounting to Rs 65,520 crore.
The Street responded favourably to this news, propelling L&T shares to a new high of Rs 2,854.95 in intraday trade on the BSE, closing at Rs 2,847.05, a 4.26 per cent increase from the previous day’s close, despite the official order announcement still pending.
Additionally, for the first time ever, L&T’s market capitalisation crossed the Rs 4 trillion threshold, reaching a high of Rs 4.01 trillion in intraday trade before closing at Rs 4 trillion.
Executives at L&T declined to provide a comment on this development. An email query sent to Saudi Aramco on Thursday remained unanswered at the time of this report.
Beginning in 2019, L&T ceased disclosing the specific value of its individual order wins, instead categorising them as either ‘significant’ or ‘mega’, with mega referring to orders exceeding Rs 7,000 crore in value.
In 2023 thus far, L&T has announced two mega category projects: a package for the Mumbai-Ahmedabad high-speed rail corridor and multiple hydrocarbon contracts from an undisclosed West Asian client.
Notable past mega category project wins by L&T include the South West Gas Fields Development Project for Sonatrach in Algeria, the Oil & Gas Subsea Project for Oil and Natural Gas Corporation, expansion projects for ArcelorMittal Nippon Steel India, and other hydrocarbon ventures in Saudi Arabia.
West Asia continues to be a major source of order wins for India’s largest engineering company.
As of June 2023, about a quarter of L&T’s Rs 4.12 trillion order book consisted of projects originating from this region, predominantly in the renewable energy and hydrocarbon sectors.
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