L&T Wins Major Order Amidst Analyst Downgrades on Middle East Risks
Overview
Larsen & Toubro (L&T) secured a "large" order for India's largest pumped storage project, valued between ₹2,500-₹5,000 crore. However, analysts are flagging concerns over potential order cancellations in the Middle East, leading some to cut future order inflow estimates and cautioning about limited near-term stock upside.
Stocks Mentioned
L&T Lands Mega Pumped Storage Project
Larsen & Toubro (L&T) Ltd. announced on Wednesday, January 14, a significant order win valued between ₹2,500 crore and ₹5,000 crore. The contract comes from Torrent Energy Storage Solutions Pvt. Ltd. for constructing India's largest pumped storage project, the 3,000 MW Saidongar-1 project in Raigad, Maharashtra. L&T's Heavy Civil Infrastructure business will handle the design, engineering, and execution of all civil and hydromechanical work.
Middle East Concerns Cast Shadow
The order win is tempered by analyst caution regarding L&T's overall order inflows. Lingering concerns stem from reports of potential order cancellations worth $8.7 billion being discussed in Kuwait. While L&T clarified these cancellations were not part of its existing order book, the company had previously indicated it was the lowest bidder on Kuwaiti bids totaling around $4.5 billion.
Analyst Estimates Slashed
Brokerages are revising L&T's future projections. JM Financial expects potential delays or cancellations could impact order inflow, prompting a 5-6% cut in core order inflow estimates for fiscal years 2026-2028. They also foresee a possible 3% impact on core EBITDA for FY28. Axis Capital noted that these cancellations signal a scaling down of a significant order prospect and suggested that L&T might find it difficult to surpass its 10% consolidated inflow growth guidance for FY26.
Stock Reaction
Shares of Larsen & Toubro were trading 0.4% lower on Wednesday, extending a losing streak to five consecutive sessions. The stock was trading at ₹3,874.7. Analysts suggest that recent price movements have largely factored in potential order deferrals, but some see capped near-term upside due to ongoing Middle East uncertainties and fluctuating oil prices.
