Larsen & Toubro Ltd. (L&T), expects its international business to grow, even as the domestic market slows down. This comes after L&T received global credit ratings higher than India’s sovereign rating.
Fitch Ratings gave L&T a BBB+ rating earlier this month, two notches above India’s sovereign rating. S&P Global Ratings gave a similar rating in May. This places L&T alongside Reliance Industries Ltd. as the only two Indian firms with higher global ratings than the sovereign.
“This milestone will help us bid for more international projects, both independently and through joint ventures,” said R Shankar Raman, whole-time director and chief financial officer.
Despite the improved ratings, L&T has no immediate plans for offshore fundraising. Raman said the company’s cash flows are sufficient. However, the new ratings will help L&T get better support from international banks when bidding for overseas contracts.
“We will now intensify engagements with international banks. They will be better positioned to issue bank guarantees and letters of credit, helping us access credit facilities and strengthen our financial obligations,” Raman said.
L&T’s international orders have increased over the last four years. International orders made up 38% of its order book in March 2024, up from 25% in March 2020. Most of these orders are for renewable energy, urban infrastructure, and oil and gas projects in the Middle East. Saudi Arabia, the UAE, Qatar, and Kuwait are the biggest spenders.
One of L&T’s largest clients in the region is Saudi Aramco, which plans to spend $48 billion to $58 billion on capital expenditure this year. L&T aims to win 10% of Saudi Aramco’s annual spending each year, according to Raman.
