"L&T Anticipates Increased Global Orders Following Ratings Upgrade".

Larsen & Toubro Ltd. (L&T), India's largest engineering and construction company, anticipates a boost in its international business following recent global credit ratings higher than the sovereign's. R Shankar Raman, whole-time director and chief financial officer, highlighted in a recent interview that these ratings milestones will enhance L&T's ability to pursue more international projects independently and through joint ventures.

Fitch Ratings Inc. awarded L&T BBB+ ratings earlier this month, marking it two notches above the sovereign rating. Similarly, S&P Global Ratings conferred a comparable ranking in May, making L&T one of only two Indian firms, alongside Reliance Industries Ltd., to achieve higher global ratings than the sovereign.

Despite these elevated international credit ratings, Raman clarified that L&T currently has no immediate plans for offshore fundraising due to sufficient operational cash flows.

The enhanced ratings are expected to bolster L&T's standing with international banks, facilitating easier access to credit facilities crucial for bidding on overseas contracts. This advantage comes at a time when the domestic market shows signs of slowing down.

"We will intensify engagements with international banks, enabling smoother issuance of bank guarantees and letters of credit," Raman noted, underscoring the strategic importance of strengthening financial obligations through enhanced financial credibility.

Over the past four years, L&T has witnessed a steady increase in its international orders, with the segment's contribution to its order book rising from 25% in fiscal year 2020 to 38% by March 2024.

Raman pointed out that a significant portion of L&T's international orders is focused on renewable energy, urban infrastructure, and oil and gas projects in the Middle East, where major spenders include Saudi Arabia, United Arab Emirates, Qatar, and Kuwait.

Highlighting Saudi Aramco as a key client in the region, Raman noted plans to deepen engagement with the world's largest oil exporter, which is slated to invest between $48 billion to $58 billion in capital expenditure this year. L&T aims to secure a 10% share of Saudi Aramco's annual spending as part of its strategic growth objectives.

The company's proactive stance in expanding its international footprint underscores its ambitions to diversify revenue streams and capitalize on robust growth opportunities in global markets.

ET