Why Is L&T Exiting Hyderabad Metro Project? Will It Affect Commuters And Ticket Prices?

Larsen & Toubro agrees to sell its entire holding in LT Metro Rail Hyderabad Ltd to Hyderabad Metro Rail Ltd for Rs 1,461.47 crore, with completion anticipated by June. The deal realigns ownership and includes debt refinancing, reflecting past financial and regulatory challenges faced by the Hyderabad metro project.

Infrastructure company Larsen & Toubro has agreed to sell its full holding in L&T Metro Rail (Hyderabad) Ltd to Hyderabad Metro Rail Ltd for Rs 1,461.47 crore, formally stepping away from the Hyderabad urban metro project, according to a regulatory filing on 29 April.

The share transfer will be carried out through a binding agreement between the two sides. L&T stated in the filing that it has "executed a share purchase agreement with Hyderabad Metro Rail Limited, a Government of Telangana Enterprise, for disposal of its entire shareholding in L&T Metro Rail (Hyderabad) Ltd, a subsidiary of the company, for a consideration of Rs 1,461.47 crore."

L&T Metro Rail (Hyderabad) stake sale details

The company expects the transaction to close by the end of June, subject to usual approvals. After completion, L&T Metro Rail (Hyderabad) Ltd will no longer be treated as a subsidiary of Larsen & Toubro, bringing an organisational shift in the metro project’s ownership structure.

Larsen and Toubro also outlined the debt plan linked to the deal in the exchange note. The filing added: "Upon closing of the transaction, Hyderabad Metro Rail Limited proposes to refinance the existing debt of LTMRHL. Consequently, the Corporate Guarantee and Letter of Comfort issued by the Company in respect of such debt shall be released."

L&T Metro Rail (Hyderabad) project challenges and losses

Key financial figures related to the L&T Metro Rail (Hyderabad) transaction are given below.

Before this agreement, Larsen and Toubro had already signalled an intention to exit L&T Metro Rail (Hyderabad) Ltd. The company had said it wanted to sell its stake, which is above 90 per cent, to the state or central government using a new special purpose vehicle, due to operational and accumulated losses.

L&T Metro Rail had written to the Ministry of Housing and Urban Affairs about the project finances. The letter stated that the Telangana government had not extended the expected support despite repeated requests, and the delay was deepening the financial strain on the concessionaire and making daily management harder.

The company has previously pointed to structural, regulatory and financial hurdles that affected L&T Metro Rail (Hyderabad). It cited higher costs and delays linked to issues outside the concessionaire’s control, including property acquisition, right of way, changes in alignment and shifting of utilities, which together pushed up time and expenditure on the Hyderabad metro project.