Why L&T Shares Are On The Up Today?

L&T shares were on the up on early Tuesday after the construction behemoth announced on Monday that they’ve secured a major order from Perdaman Chemicals & Fertilisers to construct a 2.3 million tonne urea plant in Australia. Once finished, this plant will rank as Australia’s largest urea facility and stand among the world’s top producers.

What Happened? Although L&T didn’t reveal the exact value of the deal, they classified it as a “significant order”, which typically ranges between ₹1,000 and ₹2,500 crore. SN Subrahmanyan, L&T Group Chairman and Managing Director-Designate, mentioned that they’ve decided not to disclose contract values as they can fluctuate by completion time.

Italian firm Saipem & Clough, the Engineering, Procurement, and Construction (EPC) contractor for Indian-owned Perdaman, awarded the contract to L&T. The order tasks L&T’s Energy Hydrocarbon with fabricating and supplying modules for the urea plant and a 1.3 metric tonne ammonia unit. Additionally, L&T Heavy Engineering will handle packaging the urea equipment.

The facility, located in Western Australia’s Burrup Peninsula, will be a global leader in modular and prefabricated units in the fertiliser sector. L&T will build parts at their Hazira and Kattupalli yards near Chennai, and then ship them to Australia for assembly. Subrahmanyan highlighted the choice of modular construction due to high labour costs and scarcity.

Subrahmanyan also noted that constructing the plant in Australia would triple the costs. The contract requires L&T to deliver about 50,000 tonnes of modules from their Kattupalli facility within 32 months.

Price Action: L&T shares were trading 0.66% higher at ₹2,679.80, shortly after markets opened for trading on Tuesday.

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