L&T shares slide on Kuwait oil tender uncertainty

Shares of Larsen & Toubro fell sharply in early trading on January 13, extending losses after reports indicated that Kuwait is weighing the cancellation of oil and gas project tenders with an estimated value of $8.7 billion, a development that unsettled investors exposed to the company’s hydrocarbons order book.

The stock dropped close to 3 per cent during morning deals, touching a one-month low of Rs 3,911 apiece before trimming some losses. The decline deepened a pullback that has gathered pace since the scrip touched a fresh 52-week high of Rs 4,195 on January 5. From that peak, the shares have shed roughly 7 per cent, reflecting a rapid reassessment of near-term risk by the market.

Investor nerves were rattled by indications that Kuwait is reviewing procurement plans for a set of upstream and downstream oil projects amid broader fiscal and policy deliberations. While no formal cancellation has been announced, the possibility that tenders could be withdrawn or delayed has raised concerns about execution timelines and order inflows for global engineering and construction contractors active in the Gulf.

L&T has built a sizeable presence in the Middle East over decades, with hydrocarbons, power transmission and heavy civil engineering forming core pillars of its overseas business. Kuwait has been a steady contributor to regional revenue, particularly through refinery upgrades, pipelines and associated infrastructure. Any change to the tender pipeline in that market therefore has a disproportionate signalling effect on sentiment, even if the direct financial exposure to the reported $8.7 billion package remains to be clarified.

Market participants said the sell-off reflected caution rather than a definitive reassessment of earnings. The hydrocarbons segment accounts for a meaningful share of L&T’s consolidated order book, but projects are spread across geographies including Saudi Arabia, the UAE and Qatar. Analysts noted that delays or cancellations in one market are often offset over time by awards elsewhere, given the scale of planned energy investment across the region.

Still, the timing of the reports mattered. The stock had rallied strongly into early January on expectations of robust order inflows, margin stability and a sustained private-sector capex cycle. Valuations had become less forgiving after the rally, leaving little room for adverse headlines. Profit-taking accelerated once the Kuwait news circulated, pushing the shares below short-term technical support levels.

Company officials did not comment publicly on the reports during trading hours. Historically, L&T has emphasised that its bidding strategy in the Middle East is selective, with a focus on risk-adjusted returns and payment security. The group has also diversified its revenue streams through services, technology and domestic infrastructure projects, reducing reliance on any single overseas market.

Broader market conditions added to the pressure. Benchmark indices were mixed, and capital goods stocks underperformed as investors rotated towards defensives. Rising global bond yields and uncertainty around energy prices have also injected volatility into stocks linked to large project awards, where cash flows are spread over long execution cycles.

Industry watchers said Kuwait’s deliberations need to be seen in the context of wider policy discussions on energy transition, fiscal consolidation and local content requirements. Governments across the Gulf have periodically re-sequenced project pipelines to align with budget priorities or revised development plans. Such pauses do not always translate into permanent cancellations, but they can disrupt award schedules and create short-term visibility gaps for contractors.

For L&T, near-term focus is likely to remain on converting a healthy pipeline into executable orders while maintaining margins amid competitive bidding. The company has previously guided to disciplined growth, signalling that it would avoid aggressive pricing even if that meant slower order accumulation in certain markets.