L&T secures $3.9 bn contracts for Saudi Aramco's Jafurah expansion

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L&T secures $3.9 bn contracts for Saudi Aramco's Jafurah expansion

L&T secures $3.9 bn contracts for Saudi Aramco's Jafurah expansion

Industry News
Sep 08,23

L&T's market capitalisation surpassed the Rs 4 trillion mark for the first time ever, reaching an intraday high of Rs 4.01 trillion before settling at Rs 4 trillion.

L&T secures $3.9 bn contracts for Saudi Aramco's Jafurah expansion

Saudi Aramco's expansion project at its Jafurah unconventional gas production site in Saudi Arabia, valued at $10 billion, has seen L&T selected as the contractor for two key packages. Package 1, worth $2.9 billion, and Package 3, with a value of $1 billion, have been awarded to L&T, as reported by MEED.

While specific project value details remain undisclosed, an insider confirmed that Aramco has indeed entrusted the project to L&T. This achievement marks one of the largest order wins in L&T's recent history, totalling $3.9 billion (equivalent to Rs 32,455 crore at an exchange rate of Rs 83.22 per US dollar). To put this into perspective, during the entire three-month period ending June 2023, L&T secured total orders amounting to Rs 65,520 crore.

Investors responded positively to this news, driving L&T shares to an intraday high of Rs 2,854.95 on the BSE, ultimately closing at Rs 2,847.05. This represented a 4.26 per cent increase from the previous day's closing price, despite the official order announcement still pending.

Furthermore, L&T's market capitalisation surpassed the Rs 4 trillion mark for the first time ever, reaching an intraday high of Rs 4.01 trillion before settling at Rs 4 trillion. Executives at L&T refrained from providing comments on this development. An email query sent to Saudi Aramco remained unanswered at the time of this report.

Notably, since 2019, L&T has stopped disclosing the specific values of individual order wins, instead categorising them as either 'significant' or 'mega', with 'mega' denoting orders exceeding Rs 7,000 crore in value. In 2023, L&T has announced two 'mega' category projects: a package for the Mumbai-Ahmedabad high-speed rail corridor and multiple hydrocarbon contracts from an undisclosed West Asian client.

Some of L&T's past 'mega' category project wins include the South West Gas Fields Development Project for Sonatrach in Algeria, the Oil & Gas Subsea Project for Oil and Natural Gas Corporation, expansion projects for ArcelorMittal Nippon Steel India, and other hydrocarbon ventures in Saudi Arabia.

As of June 2023, approximately 25 per cent of L&T's Rs 4.12 trillion order book consists of projects originating from this region, primarily in the renewable energy and hydrocarbon sectors.

Source: Business Standard