Larsen & Toubro Ltd. shares hit a record high, pushing the market cap over Rs 4 lakh crore after it won a contract from Saudi Aramco.
The company won contracts worth Rs 32,400 crore from Saudi Aramco for Phase II of the Jafurah unconventional gas development, according to a media report.
L&T has not commented on the development.
According to a Morgan Stanley Sept. 7 note, the award is for two packages.
Gas processing plant along with main process units ($2.9 billion)
Gas compression units ($1 billion).
This order would account for 13% of L&T's annual guidance of 10-12% growth in FY24E and 17% of the core order inflows, the research firm said.
L&T's hydrocarbon prospect list was worth Rs 3.47 lakh crore in the first quarter. Saudi Aramco has guided for capex of $45–55 billion in CY23 versus $37.6 billion in 2022, Morgan Stanley said.
The research firm suggests an 'overweight' rating with a price target of Rs 2,935, implying a return potential of 3.09%.
Saudi Aramco has chosen contractors for the five primary engineering, procurement, and construction packages associated with the estimated $10 billion second expansion phase of its Jafurah unconventional gas production project, according to a report by MEED (Middle East Economic Digest).
MEED said the key EPC packages, their estimated values, and the selected contractors for the second expansion phase of the Jafurah unconventional gas production project are as follows:
Package 1: Gas processing plant and main process units, $2.9 billion contractor: Larsen & Toubro Energy Hydrocarbon (India)
Package 2: Utilities and Offsites: $2.4 billion contractor: Hyundai Engineering (South Korea)
Package 3: Gas compression units, $1 billion Contractor: Larsen & Toubro Energy Hydrocarbon
Riyas Natural Gas Liquids (NGL) Package 1: NGL Fractionation Trains: $1 billion Contractor: Tecnicas Reunidas (Spain)
Riyas NGL Package 2: Utilities, Storage, and Export facilities – $2.2 billion Contractor: Tecnicas Reunidas
Shares of L&T was trading 1.68% higher at Rs 2,894.25 apiece, compared to a 0.22% advance in the benchmark NSE Nifty 50 at 9:42 a.m. The shares rose as much as 2.89% intraday to hit a record high of Rs 2,928.7 apiece.
The company's market cap crossed Rs 4 lakh crore to hit Rs 4,06,26,762.04 lakh as of 9:42 a.m. on Friday.
It has risen 38.87% on a year-to-date basis. The total traded volume stood at 6.4 times its 30-day average. The relative strength index was at 79, implying that the stock may be overbought.
Of the 41 analysts tracking the company, 38 maintain a 'buy', one suggests a 'hold', and two recommend a 'sell', according to Bloomberg data. The average of 12-month price target given by analysts implies a downside of 2.5%.
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