Larsen & Toubro Secures Middle East Orders, Signals Regional Business Recovery
Indian engineering firm Larsen & Toubro won 13 new orders since early July, with seven from the Middle East. This demonstrates a business rebound in the region after recent conflict disruptions.
Order Inflows Demonstrate Recovery
Indian engineering major Larsen & Toubro (L&T) secured 13 new orders since early July. Seven of these contracts originated from the Middle East, showing a business recovery in the region. Bloomberg News estimates the average order value for the current quarter, ending September 30, at 1.11 trillion rupees.
This figure surpasses the 1.08 trillion rupees in orders reported during the preceding quarter. Even at the lower end, new wins are estimated at 938 billion rupees. L&T declined to comment on these estimated order inflow numbers.
Middle East Drives Revenue and Infrastructure
The Middle East contributed approximately one-third of L&T's 2.86 trillion rupees revenue for the year ended March 31. The new contracts include significant projects for a gas compression facility and offshore infrastructure. Each of these Middle East projects is valued at over 150 billion rupees.
Bloomberg Intelligence analyst Denise Wong attributes this renewed activity to resilient energy prices. These prices bolster government budgets within Gulf Cooperation Council (GCC) countries, driving increased infrastructure spending.
Outlook and Market Response
L&T's Chief Financial Officer P Ramakrishnan stated in July that Middle East tendering momentum remained strong. He anticipated project awards would increase from L&T's second fiscal quarter, running July to September. This aligns with forecasts from SLB, the world’s largest oil field services firm, which expects constructive oil and gas investment into 2027.
L&T shares initially fell after US and Israeli strikes on Iran but have since recovered as signs of easing conflict emerged.
Conversion Challenges Remain
The immediate business challenge for L&T involves converting these substantial order wins into actual profits. Denise Wong highlights ongoing operational risks and elevated costs stemming from the conflict. These factors could lead to execution delays and expense overruns on projects. Such issues may weigh on L&T's revenue conversion rates and project margins. Investors will monitor L&T's ability to mitigate these risks and maintain profitability in the coming quarters.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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