L&T receives contract to execute howitzers; stock up 0.6%

Conglomerate, Larsen & Toubro’s defence segment has received a contract from Hanwa Techwin (HTW) of South Korea to execute a 155mm/52 cal tracked self-propelled gun programme for the Indian Army. L&T qualified based on performance of its self-propelled howitzer K9-VAJRA-T.

K9-VAJRA-T is an advanced version of HTW’s k9 Thunder (1000 plus already in service in Korea) that is majorly used in desert operations.

Defence segment of L&T comes under Heavy Engineering (HE) segment that held total order inflow of Rs 2295 crore as on FY16, of which 62% of orders are from overseas. However, HE segment as on Q3FY17 was just 2% of the total order inflow of Rs 95700 crore and 3% of the total order book of Rs 258600 crore of L&T.

Moreover, delayed defence ordering had impacted company’s shipbuilding performance in Q3FY17. However, with rising geopolitical tensions and company’s tie-ups with Indian Defence Ministry, company is expected to get orders accordingly.

Over next 2-3 years, company is expected to get opportunities for new-build naval platforms, refit of conventional submarines, artillery and air defence guns, close-in-weapon system, military bridging systems, missile programmes and sub-systems for space launch vehicles. Company’s business is future-ready to act proactively towards any such contracts.

The stock of L&T took a reversal after hitting day’s low at 1680 levels, and is trading 0.6% up at 1690 mark. Stock had opened on a positive note at Rs 1685, up 4 points from the previous close.