Larsen & Toubro 's Heavy Civil Infrastructure business vertical has secured a significant milestone by winning a large contract for India's biggest pumped storage project. The company announced on January 14, 2026, that it has been awarded the contract by Torrent Energy Storage Solutions Pvt Ltd (earlier known as Torrent PSH 3 Pvt Ltd) for the 3000 MW Saidongar-1 Pumped Storage Project in Raigad, Maharashtra.

Project Details and Scope

The Saidongar-1 Pumped Storage Project represents a major infrastructure development for India's energy sector. The project specifications and contract details are outlined below:

The comprehensive scope of work includes design, engineering and execution of all civil and hydro-mechanical jobs associated with the project. This positions L&T to play a pivotal role in bringing to life a project of immense significance, expected to enhance grid reliability and energy security for Maharashtra and beyond.

Strategic Significance

This contract award reinforces L&T's position as a trusted partner for large-scale, high-capacity pumped storage solutions. The company's track-record of engineering excellence, timely execution and world-class safety standards has enabled it to secure this project of national importance.

Pumped storage projects like Saidongar-1 serve critical functions in India's energy infrastructure:

• Ensuring grid stability and meeting peak power demand
• Storing surplus energy during low-demand periods
• Releasing stored energy during high-demand periods
• Providing reliable and flexible energy solutions
• Strengthening India's energy security
• Supporting long-term decarbonisation goals

Company Background

Larsen & Toubro operates as a USD 30.00 billion Indian multinational engaged in EPC Projects, Hi-Tech Manufacturing, and Services across multiple geographies. The company's strong, customer-focussed approach and constant quest for top-class quality have enabled it to attain and sustain leadership in its major lines of business for eight decades.

Contract Classification Framework

L&T categorizes its orders based on value ranges, with the Saidongar-1 project falling under the "Large" classification:

This contract award demonstrates L&T's continued strength in securing substantial infrastructure projects and reinforces its market position in the heavy civil infrastructure segment.

HSBC Global Investment Research expects Larsen & Toubro to post decent third quarter performance, supported by stronger order prospect pipeline and robust order backlog, even as macro concerns weigh on capex outlooks both domestically and internationally. The brokerage maintains its hold rating while reducing the target price to ₹3,900 from ₹4,000, implying a 3% downside from current levels.

Strong Order Pipeline Drives Q3 Expectations

The quarter has commenced with promising order prospects, as the company reported a 28% increase in its current H2 pipeline. Management indicated during the Q2 earnings call that it is positioned to secure several large opportunities in the near term.

HSBC notes that a substantial portion of orders remains unannounced in terms of both value and counterparty details. The brokerage believes L&T can absorb an 11% decline in order inflows during the second half of the fiscal year and still meet its 10% order intake guidance for FY26.

Execution Challenges and Revenue Projections

Q2 faced execution challenges due to inclement weather conditions and slower project implementation, effects that may continue into Q3. Despite these headwinds, HSBC expects 24% revenue growth in Q3 on a comparatively low base. To achieve its 15% FY26 revenue guidance, L&T requires 17% growth in the second half of FY26, which HSBC considers achievable given current fundamentals.

Macro Concerns Impact Future Outlook

HSBC flags several macro worries extending beyond Q3 performance, leading to cuts in Q4 order intake estimates. Key concerns include:

• Global market volatility affecting international projects
• Lower oil prices impacting Middle East operations
• Potential controlled central capex due to reduced tax revenues
• Fiscal prudence leading to slower government orders

As a result, the brokerage has trimmed FY26 order intake growth expectations to 15% from the earlier projection of 18%. However, the large order backlog is expected to support sustained earnings performance over the medium term.

Regional and Sectoral Dynamics

In the Middle East, one of L&T's fastest-growing markets, lower oil prices and potential gas supply glut over the next three years could slow ordering activity. The brokerage expects private capex to gain momentum, noting that 30% of L&T's order book now comprises private sector projects, though this segment has historically been disappointing.

Valuation Concerns

HSBC highlights valuation concerns, noting the stock trades at 25x FY27E PE, representing one standard deviation above the 2015-19 cycle mean. This elevated valuation offers limited margin of safety according to the brokerage's assessment. Trade disruptions could also pose additional margin risks going forward.

While HSBC remains positive about the strong order book driving execution over the coming years, it cautions about potential headwinds from fiscal prudence and tighter policy affecting central and state government orders.