L&T Shares Rise After Securing Contract For Indian Navy Fleet Support Ships

Larsen & Toubro Ltd. shares rose after the company won an order for part construction of two fleet support ships for the Indian Navy. The precision engineering systems business vertical of the company received the order from Hindustan Shipyard Ltd., with Indian Navy being the end user.

The value of the project will range between Rs 1,000 crore and Rs 2,500 crore, which L&T classifies as a significant project, according to an exchange filing on Tuesday. The company will construct the two fleet support ships at its greenfield shipyard at Kattupalli, near Chennai.

Fleet support ships are specialised naval vessels providing logistics and material support to the naval force at sea. It would be among the largest vessels in the Indian naval fleet with more than 220 meter in length and approximately 45,000-ton displacement, it said. In August 2023, Indian Navy had signed a contract with Hindustan Shipyard to design and construct five such ships for the Indian Navy.

To support the Government of India's vision of 'Aatmanirbhar Bharat', these vessels will be built in domestic yards, the filing said. This collaborative approach in shipbuilding will help achieve the strategic national objectives of rapidly enhancing the Indian Naval fleet, while promoting economic activity and technological advancement in India's maritime domain, it said.

Shares of Larsen & Toubro rose as much as 1.46%, the highest level since June 19, before paring some gains to trade 1.14% higher at 12:20 p.m. This compares to an 0.29% advance in the NSE Nifty 50.

The stock has risen 50.49% in the last 12 months. Total traded volume so far in the day stood at 0.58 times its 30-day average on NSE. The relative strength index was at 57.15.

Out of 35 analysts tracking the company, 30 maintain a 'buy' rating, three recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 6.2%.