Larsen & Toubro’s - Toning Down International Exposure :: Edelweiss

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In one of his press interviews, Larsen & Toubro’s (L&T) chairman, Mr. A M Naik, mentioned about focusing more on Indian operations from FY16 taking cue from expected gradual recovery in both domestic capex and overall economic growth. In past 2 years, L&T has been adhering to its Middle East centered strategy. In a change of stance, the company will be focusing more on domestic markets going ahead. We believe slow down in the Middle East (ME) oil and gas ordering coupled with major cost overruns booked by the company in the past 1 year has resulted in such shift. Management is bullish on domestic infra, particularly power T&D, water treatment, smart cities and transportation.

Training focus on domestic market 

L&Ts top management, after following an aggressive ME-focused strategy for more than 2 years, is now changing gears and will focus more on the much profitable domestic market. The company had enhanced penetration in the ME during FY13-14 with more than INR350bn (~33% of total order intake) worth projects to counter domestic slowdown. However, slow down in ME oil and gas ordering coupled with major cost overruns booked by the company in the past 1 year, we believe, has seen it alter its focus. Management is bullish on the domestic infra space, particularly power T&D, water treatment, smart cities and transportation.

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https://www.edelweiss.in/research/EdelFlash-Larsen-And-Toubro%E2%80%99s--Toning-Down-International-Exposure/28630.html