L&T Wins Major Order for Thermal Power Projects, Marking Strategic Shift
On November 12, 2024, engineering giant Larsen & Toubro (L&T) has announced a major contract from NTPC for developing thermal power plants in Madhya Pradesh and Bihar. Although L&T has not disclosed the precise value of this ‘limited notice to proceed’ (LNTP) order, estimates from analysts suggest a value close to ₹22,000 crore, ranking among the company’s largest domestic projects, similar to its 2020 bullet-train contract for the Mumbai-Ahmedabad High-Speed Rail Project.
Order Details and Strategic Shift
The project includes a 2×800 MW thermal power plant at Gadarwara in Madhya Pradesh and a 3×800 MW plant at Nabinagar in Bihar. This order is particularly noteworthy as it signals a change in L&T’s strategy; the company had previously decided against bidding for thermal power projects due to unfavourable contract terms. However, recent discussions led to a strategic reversal, as explained by Subramanian Sarma, President (Energy) and Whole-Time Director of L&T, during an October media call.
Background and Historical Wins
This order win adds to L&T’s substantial order book, which stood at ₹5.1 trillion as of September 2024, with 40% of projects based internationally, especially in West Asia. L&T’s recent win rivals the scale of its 2020 contract to construct a 237.1-km section of the Mumbai-Ahmedabad high-speed rail (MAHSR) project, previously its largest engineering, procurement, and construction (EPC) contract in India.
Market Performance
On the day of the announcement, L&T’s stock closed at ₹3,547.95 on the BSE, a decrease of 1.21%. The stock price has fluctuated within a 52-week range of ₹3,031.05 to ₹3,948.60, reflecting investor responses to the company’s high-value order book and strategic shifts.