L&T Shares Fall 3% as Kuwait Considers Cancelling $8.7 Billion Oil Project Tenders
Larsen & Toubro shares declined 3% to ₹3,911 on January 13, 2025, following reports of Kuwait considering cancellation of $8.7 billion oil project tenders where L&T was reportedly the lowest bidder for over $4.5 billion worth contracts. Despite this setback, the company secured a ₹1,000-2,500 crore bridge construction order in West Bengal and maintains confidence in exceeding its FY26 order inflow guidance of 10% with a strong pipeline of ₹3.57 trillion in energy projects.
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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:
| Period | Performance | Key Level |
|---|---|---|
| January 13 decline | -3% | ₹3,911 (one-month low) |
| From 52-week high | -7% | ₹4,195 (January 5) |
| Past five days | -4% | Continued weakness |
| Past six months | +13% | Overall positive trend |
| Current P/E ratio | 28.87 | Valuation metric |
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:
| Project Details | Specifications |
|---|---|
| Order value | ₹1,000-2,500 crores |
| Project type | Arterial cable-stayed bridge |
| Location | Muri Ganga river, West Bengal |
| Bridge length | 3.2 km extradosed cable-stayed |
| Maximum span | 177 meters |
| Lane configuration | 2+2 lanes |
| Approach roads | 0.9 km (Kakdwip) + 0.65 km (Sagar Island) |
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:
| Segment | Pipeline Value | Geographic Focus |
|---|---|---|
| Total Energy Projects | ₹3.57 trillion | Mixed |
| Hydrocarbon prospects | ₹2.93 trillion | 93% international |
| CarbonLite Solutions | ₹0.46 trillion | Primarily domestic |
| Clean energy prospects | ₹0.18 trillion | Gas-to-power driven |
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.
Historical Stock Returns for Larsen & Toubro
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -3.27% | -6.34% | -4.58% | +9.79% | +12.21% | +188.00% |
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