Larsen & Toubro Ltd is in the process of finalizing tenders to set up coal-fired power plants of capacity 6.4 GW for NTPC Ltd in Madhya Pradesh, Telangana and Bihar and will likely announce the order before the end of the October-December 2024 quarter, the company's management said on October 30.
"L&T has a good chance to win orders for projects for 4 GW as part of NTPC tenders," L&T's senior executive vice president (Energy) and whole-time director, Subramanian Sarma said in its post-earnings conference call on October 30, after it was reported last week that L&T has outbid Bharat Heavy Electricals Ltd (BHEL) for contracts worth over Rs 40,000 crore floated by state-owned NTPC.
NTPC had invited bids on bulk tender basis for three super thermal power projects (STPPs) in August this year. These projects were Gadarwara STPP stage-II (in Madhya Pradesh), Telangana STPP stage-II and Nabinagar STPP stage-II (in Bihar) with the scope of work including design, engineering, manufacture, supply, construction, erection, testing and commissioning works for the main plant package based on single point responsibility.
Shankar Sarma, L&T’s head of energy businesses, explained that as part of the tenders floated by NTPC, the company that has emerged as lowest bidder for the three project would be offered to complete two projects while the second-lowest bidder would be offered to complete the third project at the price bid by the lowest bidder.
Similarly, L&T's Chief Financial Officer (CFO), R Shankar Raman, said that the company is working with NTPC on finalising the aforementioned contracts and will likely announce the orders before the end of the October-December 2024 quarter.
Despite the decline of L&T's order-inflow and slower the expected rise in its topline during the first half of 2024-25, the infrastructure major is confident of meeting its guidance set for FY25, Shankar Raman said. Back in May 2024 L&T had said it will aim for a 10 percent on-year growth in its order inflows and a topline growth of 15 percent on year in the financial year 2024-25.
In April-September, L&T saw its topline rise 15 percent on year, but its order-inflow in contracted 2.4 percent.
"L&T has identified projects worth 8 lakh crore going forward, with 60 percent of the order inflow pipeline made of infrastructure projects, and 20 percent energy projects," Shankar Raman said.
He added that a major reason why L&T has reported a contraction of its order inflow in Q2FY25 was because the company had won two international ultra-mega orders worth Rs 400 billion in the hydrocarbon business in Q2FY24, which had helped L&T propel order inflow last year at the group level.
Shankar Raman also said that L&T is planning to bid for international orders in central Asia and Africa as well in order to avoid over-reliance on one segment in the international market.
L&T's management also said that going forward it does not expect a slowdown in order inflows both from the Indian and the international market. Shankar Raman said that despite the slower start to 2024-25, L&T is confident that government capital expenditure will pick up in the second half of the year along with spending by the private sector to help order inflows pickup by the end of the year.
The consolidated order book of the group was at Rs 5,10,402 crore as on September 30, 2024, with international orders having a share of 40 percent, L&T said. The order book of Rs 5,10,402 crore represents a growth of 7 percent over Rs 450,734 crore as on September 30, 2023 and Rs 4,75,809 crore as on June 30, 2024, the company said.
Shankar Raman added that in the medium term, L&T expects government capital expenditure to drive growth of the Indian economy, with private investment picking up slowly in the airport manufacturing, railway station manufacturing, data centre, commercial building, residential building, and IT hubs manufacturing sectors. He also said that the automobile and steel industry works mostly on private capital expenditure.
He also said that there exists opportunities worth $60 billion from infrastructure projects in the middle eastern countries, out of which L&T is targeting to win 5-10 percent.
L&T also said that as part of its plans to reduce the debt of the Hyderabad Metro project, the company will accelerate its transit-oriented development (TOD) monetization plan for the project.
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