Shares of Larsen and Toubro are higher by more than 3.5 percent on September 26, as investors welcomed the clarity on financials after Telangana government agreed to take over Phase-I of Hyderabad Metro project for a payment of Rs 2,000 crore along with taking over the debt worth Rs 13,000 crore, a report by news agency PTI said.
This is a nine-month high for the shares of L&T.
"After detailed negotiations, with an objective to expedite the phase 2 approval by GoI, it was agreed in principle that the State government would take over Phase-I Metro Rail project by taking over the debt of the project, which now stands at about Rs 13,000 cr. Further, the state government will pay about Rs 2,000 cr to L&T towards their equity investment in LTMRHL as a one-time settlement," PTI News reported citing people familiar with the development.
The news report added that L&T had last month expressed interest in offloading its stake in the Metro Rail project citing operational and accumulated losses, following which the decision was taking in a meeting between Chief Minister A Revanth Reddy and senior officials with L&T group CMD S N Subrahmanyan.
The Group had been exploring divestment options of non-core assets and various alternatives to de-risk exposure in L&T Metro Rail (Hyderabad).
A consortium of 10 lenders, including State Bank of India has sanctioned the debt for the project.
L&T Metro - Financials
L&T Hyderabad Metro Rail's revenue from operations for FY25 was Rs 1,108.54 crore versus Rs 1,399.31 crore a year ago, a fall of 21 percent, with loss increasing by 13 percent on year, owing to delays and cost overrun. The SPV posted a loss of Rs 208 crore in Q1FY26 as compared to a loss of Rs 214 crore in Q1 FY25. . The EBITDA for Hyderabad metro was Rs 101 crore during Q1FY25 and stands at Rs 112 crore in Q1FY26.
"...at the current level of roughly Rs 12,500-odd crore of debt, the Hyderabad metro interest averages around Rs 240-250 crore," the company had said in the June quarter earnings call, which has resulted in a loss worth Rs 208 crore on L&T's books in Q1FY26.
JM Financial in a note said it expects L&T to surpass its 18 percent target of RoE in FY26 once Hyderabad Metro losses end, and interest income adds up.
About Hyderabad Metro
The Hyderabad metro rail system comprises of three elevated corridors from Miyapur to LB Nagar, Jubilee Bus Station to Mahatma Gandhi Bus Station and Nagole to Raidurg, covering a total network of 69.2 km. The metro network was commissioned in phases, with the final stretch being commissioned in February 2020.
In May 2025, the fare per passenger has been revised upwards on a net basis by 20 percent over existing fares.
Other Recent Triggers
L&T has recently announced a strategic partnership with BEL for the 5th-gen fighter (AMCA) programme, under which it will be submitting an Expression of Interest (EoI) for the project soon.
The company is also working on semiconductor products that are expected to be released next year, with the CEO of unit, Sandeep Kumar, stating that the semiconductor arm will consider an IPO after crossing the $500 million mark in revenue, according to ICICI Direct.
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