Indian engineering giant L&T’s order wins signal Middle East revival

Larsen & Toubro Ltd. has disclosed winning 13 orders since early July, with seven of those coming from the Middle East in a sign of revival in the region after the US-Iran war disrupted business.

While the engineering giant only shares a range instead of giving out the exact order value, a Bloomberg News estimate pegs the average at about 1.11 trillion rupees ($11.6 billion) in the ongoing quarter ending Sept. 30.

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That surpasses the 1.08-trillion-rupee orders reported in the preceding quarter. Even at the lower end of the range — the most conservative calculation — the new wins are estimated to be worth 938 billion rupees.

Larsen & Toubro declined to comment on the estimated order inflow numbers.

The company has been expanding its presence in the region, with the Middle East contributing about a third of its 2.86 trillion rupees revenue for the year ended March 31. The flurry of orders from the region shows continued momentum for the engineering behemoth, which posted a net income that beat analysts’ estimate for the June quarter.

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Since then, two of the biggest projects for L&T have come from the Middle East, signaling that businesses are resuming infrastructure spending. The company said it has received contracts for a gas compression project and offshore facilities, each valued at more than 150 billion rupees, without giving client names in the exchange filings.

“Resilient energy prices support government budgets in Gulf Cooperation Council countries, fueling higher infrastructure spending,” Bloomberg Intelligence analyst Denise Wong said in a note Wednesday.

Tailwinds

The company had signaled that it expected tailwinds from this region. “While the awarding activity in the Middle East witnessed some temporary slowdown, tendering and bidding momentum continues to remain robust, and we expect project awards to pick up from Q2,” Chief Financial Officer P Ramakrishnan told investors in an earnings call in July.

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Last month, the world’s largest oil field services firm SLB also said it expects constructive oil and gas investment in 2027, with customers increasing spending. The US may also be moving toward returning diplomats to its Middle East embassies as early as this week, according to a New York Times report, in an early indication the region is beginning to prepare for a gradual return to normalcy.

L&T’s shares tumbled after the US and Israel initiated strikes on Iran, which retaliated with attacks on oil and gas infrastructure across the Middle East. The stock has since recovered on signs that the conflict is easing.

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The test now will be whether the company can convert the order wins into profits. The war has introduced severe operational risks and raised costs that can lead to execution delays and expense overruns, Wong said, adding that this can weigh on revenue conversion and project margins.