Larsen and Toubro foresees no financial impact from Red Sea tensions
Whole-Time Director and Senior Executive VP (Energy), Subramanian Sarma. pointed out that L&T's business primarily lies in the eastern province, away from the Red Sea conflict zone, with the majority of projects being undertaken for Saudi Aramco.
While there may be some delays, Larsen and Toubro expects no monetary impact from the ongoing tension in the Red Sea, said Whole-Time Director and Senior Executive VP (Energy), Subramanian Sarma.
In a conversation with CNBC-TV18, Sarma pointed out that L&T's business primarily lies in the eastern province, away from the Red Sea conflict zone, with the majority of projects being undertaken for Saudi Aramco. "At this point, we see absolutely no signs of any concerns. Business is running very normal, and more projects are getting awarded," he added.
Analysts have been apprehensive about the Red Sea conflict affecting various businesses, with a BNP Paribas report highlighting the potential rise in ocean freight costs and its impact on near-term margins for companies.
The conflict in the Red Sea is forcing ships to avoid the Suez Canal and opt for longer routes triggering a spike in freight and insurance costs for shipments, more than doubling the rates in some cases.
Sarma also discussed upcoming projects. The company submitted a bid for Safaniya last year. He said updates on the bid are expected within the next 3-4 weeks.
On January 17, Larsen & Toubro announced that L&T Construction's buildings and factories business received 'significant' orders in India and Oman. L&T classifies orders in the ₹1,000 crore to ₹2,000 crore range as 'significant' ones.
Of these, the one in India, won by the company's residential business, is a repeat order from the Maharashrra government's planning and development authority. The company will construct EWS Housing, 14 towers and related infrastructure in Navi Mumbai, it informed the stock exchanges.
The company also bagged an order in the ₹10,000 crore to ₹15,000 crore range, also known as a 'mega' order, on January 16, for the railway electrification of the Mumbai-Ahmedabad bullet train project.
Earlier this month, it had bagged another 'significant' order to build a new AIIMs at Rewari in Haryana.
The market capitalisation of the company stands at ₹4,90,947 crore. The stock has gained over 45% in the last six months and close to 59% in the past year.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Jan 18, 2024 1:57 PM IST
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