L&T was one of the three bidders that involved seven large infrastructure companies. The project covers about 47% of total alignment of 508 km.
Larsen & Toubro’s (L&T) stocks gained 3.3% on Tuesday morning to trade at Rs 934 per share, as investors reacted to the news of L&T being the lowest bidder to build the largest segment package C4 of upcoming Mumbai-Ahmedabad High Speed Rail. The Engineering and Construction major could be all set to win one of the largest civil construction projects. “Financial bids for the design and construction of 237 km length of the viaduct for 508 km of Mumbai- Ahmedabad High-Speed Rail corridor were opened today and Larsen & Toubro Ltd is the lowest bidder,” said National High Speed Rail Corporation in a release on Monday.
L&T was one of the three bidders that involved seven large infrastructure companies. A consortium of Afcons Infrastructure Limited, IRCON International Limited, and JMC Projects India Ltd was one of the other two bidders. A JV between NCC Limited, Tata Project Ltd, and J. Kumar Infra Projects was the other one. At Rs 24,985 crore, this could be the largest project won by L&T. The estimated cost of the project is at Rs 20,000 crore according to HDFC Securities.
“Awarding of such mega projects will significantly strengthen L&T’s order book and further enhance its revenue visibility for coming years in times of a challenging economic environment,” said analysts at ICICI Securities. L&T, analysts say, is well placed to execute such mega projects. “Working capital and cash flow situation continues to remain key monitorable,” they added.
The project covers about 47% of total alignment of 508 km, between Vapi (Zaroli Village at Maharashtra- Gujarat Border) and Vadodara in the state of Gujarat. It includes four stations namely Vapi, Billimora, Surat and Bharuch, and Surat Depot. The high speed rail project is estimated to create more than 90,000 direct and indirect jobs during construction of the project. The mega construction project will help not just the employment scenario but also manufacturing sector. “It is estimated that close to 75 lakh MT of cement, 21 lakh MT of steel, and 1.4 lakh MT of structural steel will be used in the construction,” National High Speed Rail Corporation said.
L&T has a ROE of 14.8%, and is down 29% since the beginning of this year. The mean analysts rating for the stock, according to Refinitiv is a ‘Buy’ with a target price near Rs 1,170 per share.