Larsen & Toubro has secured a major infrastructure order worth ₹1,500-2,500 crores for its transportation infrastructure vertical, involving the construction of a strategic cable-stayed bridge in West Bengal. Despite this significant order win, the company's shares traded in negative territory during Tuesday's session, declining over 2% amid broader market concerns.

Major Bridge Construction Order

The transportation infrastructure division has won the contract for constructing an arterial cable-stayed bridge over the Muri Ganga River in South 24 Parganas, West Bengal. The comprehensive project scope demonstrates the company's capabilities in complex infrastructure development.

The bridge will feature advanced infrastructure including traffic management systems, bridge health monitoring system, architectural bridge lighting, hybrid street lighting, and complete road furniture. This project holds strategic importance as it will provide direct, all-weather road connectivity to Sagar Island, replacing the current dependency on ferry services that face frequent weather-related disruptions.

Strategic Acquisition Completed

On January 12th, L&T executed a Share Purchase Agreement to acquire the remaining 40% stake in L&T Sapura Shipping Private Limited from Sapura Nautical Power Pte Limited. The acquisition details highlight the company's consolidation strategy:

Market Performance and External Pressures

L&T shares traded at ₹3,931.95 on BSE, down from the previous closing price of ₹4,018.50, representing a decline of over 2%. The stock maintains a market capitalization of ₹5.40 lakh crores and has delivered positive returns of over 13% in the past year, though it has declined approximately 4% in the last month.

External factors have contributed to market pressure, particularly reports that Kuwait is reviewing potential cancellation of upstream oil project tenders worth approximately $8.7 billion due to bids exceeding budgeted estimates. This development creates near-term sentiment concerns given L&T's strong track record in securing large EPC contracts in the Middle East region.

Strong Financial Performance in Q2 FY26

The company reported robust financial metrics for Q2 FY26, demonstrating strong operational performance across key parameters:

The company's financial ratios reflect stable operational metrics with a debt-to-equity ratio of 1.09, current ratio of 1.25, net profit margin of 6.88%, and operating margin of 10.01%. The significant expansion in order book to ₹6,67,000 crores, comprising ₹3,40,200 crores in domestic orders and ₹3,26,800 crores in international orders, provides strong revenue visibility for future periods.

Social and Economic Impact

The West Bengal bridge project extends beyond infrastructure development, offering substantial social benefits. The connectivity solution will serve over 2 lakh residents of Sagar Island, improving access to healthcare services, enhancing mobility options, and supporting local economic activities. The all-weather connectivity represents a significant upgrade from the existing ferry-dependent transportation system.

Larsen & Toubro shares experienced a significant decline of nearly 3% on January 13, 2025, following reports that Kuwait is considering the cancellation of oil project tenders valued at $8.7 billion. The stock dropped to ₹3,911 per share during morning trading, marking a one-month low for the engineering and construction giant.

Market Impact and Stock Performance

The sharp decline represents a notable setback for L&T shares, which have now fallen approximately 7% from their recent peak. The company's stock performance over recent periods shows mixed results:

Kuwait Oil Project Tender Concerns

According to media company MEED, Kuwait's discussions regarding tender cancellations stem from bids significantly exceeding budgeted amounts, raising concerns over cost efficiency and fiscal impact. The potential cancellation could have substantial implications for L&T, as analysts quoted by CNBC-TV18 indicate the company was the lowest bidder for tenders worth more than $4.5 billion.

The $8.7 billion worth of projects under consideration for cancellation represents a significant portion of Kuwait's planned oil infrastructure investments, highlighting the challenging cost environment in the energy sector.

Recent Order Win and Business Prospects

Despite the market concerns, L&T announced a positive development on the same day, securing a significant order for bridge construction:

The bridge project will provide direct, all-weather connectivity to Sagar Island, benefiting over 200,000 residents who currently depend on ferry services often disrupted during adverse weather conditions. The infrastructure will also facilitate access for millions of devotees attending the annual Ganga Sagar Mela.

Company's Growth Outlook

L&T maintains confidence in its growth trajectory, having stated in October that it expects to exceed its full-year FY26 guidance of 10% in group order inflows. The company's management highlighted a robust order prospects pipeline:

The substantial international exposure in hydrocarbon prospects, representing 93% of opportunities overseas, underscores the potential impact of developments like the Kuwait tender situation on the company's future order book.