L&T share price Hits All-Time High on bagging ₹2,500-crore urea plant deal

Larsen & Toubro (L&T), a prominent player in the engineering and construction industry, has achieved a momentous milestone as its shares surged by over 1%, reaching an all-time high of ₹2,726 on August 23. This surge follows the company's recent triumph in securing a significant contract. L&T's energy hydrocarbon business secured a monumental ₹2,500-crore deal from the Saipem & Clough JV (SCJV) in Australia.

The deal entails the fabrication and supply of crucial process and pipe rack modules for a groundbreaking project 2.3-million-tonne-per-annum (MMTPA) urea plant set to be established by Perdaman Chemicals and Fertilisers. This plant holds immense importance, not only as Australia's largest urea plant but also as one of the world's largest. 

Expanding into Urea Plant Fabrication

L&T Heavy Engineering has not only achieved success with the module supply contract but has also secured multiple orders for the comprehensive package of urea equipment for the same pioneering project. This strategic venture aligns with L&T's expansion goals, focusing on widening its geographical footprint and client base, all while emphasizing the significance of modularization in onshore projects. Subramanian Sarma, Whole-Time Director and Senior Executive Vice President of L&T's Energy business emphasized the achievement's significance and the company's commitment to modularization concepts.

Strategic Manufacturing Deal for Urea Facility

A pivotal manufacturing deal has been struck by L&T, joining forces with Saipem and Clough JV for the production and supply of pipe-rack modules for the ambitious urea facility in Australia. The agreement encompasses a phased delivery of approximately 1,160 metric tons of equipment over a span of 25 months. While the exact value of the contract has not been disclosed, it is described as "significant," estimated to range between ₹1,000 and ₹2,500 crore. L&T aims to provide around 50,000 metric tons of modules within a 32-month timeframe. These modules will be meticulously crafted at L&T's Kattupalli Modular Fabrication Facility, ensuring they are fully tested and installation-ready upon arrival at the project site in Australia.

Stock Performance and Expansion in the Middle East

On August 23, L&T's shares concluded at ₹2,662.25 apiece, exhibiting a commendable 0.77% increase. Notably, L&T's power and distribution business has secured substantial orders ranging from ₹ 2,500 to ₹ 5,000 crore in the Middle East region. In the current year, 2023, L&T's stock has witnessed a remarkable surge of 30.6%, outperforming the S&P BSE Sensex's 7% rise. Among the notable achievements, L&T's power and distribution business secured a pivotal order to establish a 220-kV gas-insulated substation and associated transmission lines for the energy industry in the United Arab Emirates. Additionally, orders for 132-kV sub-stations and a 220-kV overhead transmission line were successfully secured in the region.

Conclusion

Larsen & Toubro's recent accomplishments underscore its unwavering commitment to expansion and innovation. By securing pivotal contracts, such as the monumental urea plant project in Australia, and by demonstrating exceptional performance in both the stock market and in securing orders abroad, L&T solidifies its position as a global leader in the engineering and construction arena. This triumph not only signifies the company's prowess but also its dedication to advancing modularization concepts and its resounding success in strategic ventures.