Shares of Larsen & Toubro (L&T) were up on March 23, reacting to the company’s announcement that it has entered into an electrolyser manufacturing binding agreement with McPhy Energy, a France-based leading electrolyser technology and manufacturing company.

The pact is for a long-term partnership to explore the opportunities unfolding in the emerging Green Hydrogen market.

At 9:29 am, shares of L&T were trading 0.8 percent higher at Rs 2,232 on the BSE.

Under this partnership, McPhy will grant an exclusive license of its pressurised alkaline electrolyser technology to L&T for the manufacturing of electrolyzers, including future product upgrades. L&T plans to set up a Gigawatt-scale manufacturing facility for electrolysers based on McPhy technology in India to serve the domestic requirements as well as cater to the other selected geographies.

“The proposed agreement is in line with L&T’s strategic vision to be present across the green energy value chain and also furthers McPhy’s aim to expand beyond the European market,” it said in a regulatory filing.

Green Hydrogen production capacity in India is estimated to grow to at least 5 MMTPA by 2030 in line with the nation’s Green Hydrogen Mission, which would call for investments upward of $100 billion. The EPC major believes India is well suited for Green Hydrogen production due to the low generation costs of renewable electricity from abundantly available solar PV and wind power sources.

The country aims to be among the world’s largest Green Hydrogen hubs.

Sharekhan by BNP Paribas is of the view that focusing on sunrise sectors such as green hydrogen, data centres, e-commerce as well as defence would lead to further diversification. The brokerage firm believes that L&T by virtue of its leadership and diversified offerings in the EPC domain would be a key beneficiary of the government’s infrastructure thrust and capex revival in private sectors. Further, increased investments in infrastructure and hydrocarbon will provide diverse opportunities.

L&T’s order book is at a record level of Rs 3.9 lakh crore, up 14 percent YoY, translating into 2.2 times its Trailing Twelve Month consolidated revenue. The company’s first nine months of FY2023 order inflows jumped by about 30 percent YOY to Rs 1.5 lakh crore, the brokerage firm added.