L&T Shares Decline 2.5% Amid Kuwait Oil Project Tender Cancellation Reports
L&T shares fell 2.5% on January 13 following reports that Kuwait may cancel $8.7 billion oil project tenders due to over-budget bids, where L&T was the lowest bidder for $4.5 billion worth contracts. Despite this setback, the company maintains a strong ₹6.5 lakh crore order book and secured a significant bridge construction order in West Bengal. The stock trades at ₹3,922.20 with 13.5% gains over the past year.
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Larsen & Toubro shares experienced a notable decline of 2.5% on Tuesday, January 13, following reports from the Middle East Economic Digest (MEED) regarding Kuwait's potential cancellation of significant oil project tenders. The engineering conglomerate's stock performance reflected investor concerns over the possible impact on its substantial order pipeline in the Middle Eastern market.
Kuwait Oil Project Tender Concerns
According to MEED, a specialized media company covering Middle East economic and business developments, Kuwait is contemplating the cancellation of oil project tenders valued at $8.7 billion. The decision stems from bids coming in significantly over budget for five major upstream contracts, prompting authorities to consider rebidding the tenders.
| Parameter: | Details |
|---|---|
| Total Tender Value: | $8.7 billion |
| L&T's Bid Position: | Lowest bidder |
| L&T's Exposure: | Over $4.5 billion |
| Contract Type: | Five major upstream oil projects |
Analysts noted that L&T was positioned as the lowest bidder for tenders worth over $4.5 billion, representing a substantial portion of the total tender value. This development has raised concerns about potential revenue impact, despite the company's robust order book position.
Company's Financial Position
L&T maintains a strong financial foundation with its current consolidated order book standing at ₹6.5 lakh crore. The company has provided order inflow guidance for financial year 2026 that is 10% higher than the previous fiscal, indicating confidence in its business pipeline despite the current uncertainty surrounding the Kuwait projects.
Significant Bridge Project Win
Countering the negative sentiment from the Kuwait developments, L&T announced a positive development through its transportation infrastructure business vertical. The company secured a significant order for constructing an arterial cable-stayed bridge over the Muri Ganga River in South 24 Parganas district, West Bengal.
| Project Component: | Specification |
|---|---|
| Order Classification: | Significant (₹1,000-2,500 crore) |
| Bridge Type: | 2+2 lane extradosed cable-stayed |
| Total Length: | 3.20 km |
| Maximum Span: | 177 metres |
| Kakdwip Approach: | 0.90 km |
| Sagar Island Approach: | 0.65 km |
The project scope encompasses advanced infrastructure features including traffic management systems, bridge health monitoring, architectural lighting, and hybrid street lighting. The bridge will provide crucial all-weather connectivity to Sagar Island, currently dependent on ferry services that face disruptions during adverse weather conditions.
Socio-Economic Impact
The West Bengal bridge project is expected to benefit over 2 lakh residents of Sagar Island by providing reliable transportation access. The infrastructure development will particularly support the annual Ganga Sagar Mela, described as the second-largest religious congregation after the Kumbh Mela, facilitating safe travel for millions of devotees from across India.
Market Performance
L&T shares closed down 2.4% at ₹3,922.20 per share around 10:20 AM on the trading day. Despite the recent decline, the stock has demonstrated resilience with gains of 13.5% over the past year, reflecting the company's overall strong market position and diversified business portfolio.
Historical Stock Returns for Larsen & Toubro
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -3.05% | -6.12% | -4.36% | +10.05% | +12.47% | +188.66% |
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