L&T Infotech IPO: Things To Know Before You Apply



Larsen & Toubro Infotech, an information technology arm of L&T is all set to hit the markets with its Initial Public Offering (IPO).

Its subscription window will be open from 11th July to 13th July at a price band of Rs.705 to Rs.710 for public offer of up to 1.75 crore equity shares making issue size of around Rs.1,225 crore.

Company Overview: 

Larsen & Toubro Infotech Limited provides information technology (IT) services and solutions in India, North America, Europe, the Asia Pacific, and internationally. The company operates through two segments, Services Cluster and Industrials Cluster. It offers ServiceFirst, a digital platform for aftermarket service management; CampusNext, a cloud ERP platform that leverages various technologies, such as virtualization, mobility, and analytics; AutomationFIRST, an integrated IT service management SaaS solution; DistributorFirst, a digital platform for distributors; and assurePro, a BPM implementation kit. The company’s products also include Unitrax, a SaaS-based transfer agency solutions; iCEOn, a SaaS-based pay-per-use platform for insurance community ecosystem; and AccuRUSI that provides insurance underwriting services.

 Its services comprise analytics and information management, applications management, cloud computing, consulting, enterprise integration, geographical information system, infrastructure management, Internet of things, manufacturing execution systems, Maximo, Microsoft dynamics, open source technologies, Oracle, salesforce, SAP, smart devices and channels, system integration, and testing services. 

The company serves customers in automotive and aerospace, banking and financial services, consumer packaged goods, energy, engineering and construction, healthcare, hi-tech and consumer electronics, insurance, life sciences, media and entertainment, plant equipment and industrial machinery, process manufacturing, retail, travel and logistics, and utilities industries. The company was formerly known as L&T Information Technology Limited and changed its name to Larsen & Toubro Infotech Limited in June 2001. Larsen & Toubro Infotech Limited was incorporated in 1996 and is headquartered in Mumbai, India. Larsen & Toubro Infotech Limited is a subsidiary of Larsen & Toubro Limited.


Objects of the Issue:
  • To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
  • To carry out the sale of up to 17,500,000 Equity Shares by the promoter L&T.


IPO details:
  • Issue Open: Jul 11, 2016 - Jul 13, 2016 
  • Issue Type: Book Built Issue IPO 
  • Issue Size: 17,500,000 Equity Shares of Rs 1 aggregating up to Rs 1,400.00 Cr 
  • Face Value: Rs 1 Per Equity Share 
  • Issue Price: Rs. 705 - Rs. 710 Per Equity Share 
  • Market Lot: 20 Shares 
  • Minimum Order Quantity: 20 Shares 
  • Listing At: BSE, NSE


L&T Infotech IPO Registrar:

Link Intime India Private Ltd
Link Intime India Private Ltd,
C-13 Pannalal Silk Mills Compound,
LBS Marg, Bhandup West, Mumbai 400078
Phone: +91-22-25963838
Fax: +91-22-25946969
Email: lntinfotech.ipo@linkintime.co.in


L&T Infotech IPO Lead Manager:

  • Citigroup Global Markets India Private Limited.
  • ICICI Securities Limited
  • Kotak Mahindra Capital Company Limited


Should You Invest in L&T Infotech IPO?

 L&T Infotech IPO appear fairly valued to us. Extensive portfolio of IT Services, strong brand equity of promoter, good management culture, sustained growth, attractive EBIDTA margins, huge Return on net worth are the key positives 

Coming to Valuation, at an asking price of Rs.695 to Rs.700, taking base of EPS of Rs.56.13 per share in FY 2016, PE comes out to be 12.38X at floor price and 12.47X at cap price (after discount).

Comparing L&T Infotech with its industry peers we found it to be standing  above Wipro, HCL Technologies and Tech Mahindra which are trading at PE of 15.6X, 15.6X and 14.7X based on their EY 2016 EPS of Rs.36.20, Rs.52.30 and Rs.32.24 per share.

Return on networth of these industry peers of also stands much lower than L&T Infotech's RoNW of 45% at 20.30%, 28.60% and 23.40% respectively in the preceding two financial years.

Keeping in mind above, we can say L&T Infotech is just fairly valued and investors may find it attractive for some quick bucks on listing. But, for long term we don't think there’s anything that differentiates L&T Infotech from the rest of the industry peers, in terms of its services. This appears to be another “me too” mid-tier IT services company.

If valuations inch up to 15-16 times earnings on listing, investors may well prefer tier-II companies with better growth prospects such as Mindtree, or some larger companies such as HCL Technologies Ltd and Tech Mahindra Ltd, which trade at only around 14.5 times trailing earnings.

We advise our readers to consult their financial advisors and cross check the information shared before taking any investment decision.




Happy Investing
The Multiplier
Sebi Regd. Advisory


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7 comments

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July 6, 2016 at 8:37 PM delete

The price band is mentioned in bar website is 705- 710. But here mentioned is 778-800.. please clarify..

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July 6, 2016 at 11:21 PM delete

soory was a technical glitch now has been updated thanks

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Puru ji
AUTHOR
July 9, 2016 at 6:50 PM delete

How will this listing impact L&T price?

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July 10, 2016 at 7:45 AM delete

L&T Infotech, as rightly put, might end up compounding money at a lower side but should do better in times to come. It is a big company and the premium over earnings does not have a significant improvement opportunity. But it might be a decent one for passive investors. Anyway good luck to investors who are having a go at the ipo. Thanks for sharing my friend.

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July 10, 2016 at 10:10 AM delete

there will be a positive impact of this listing on price of l&t we are already long in larsen sincce 1100 levels. Thanks

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kailash
AUTHOR
July 14, 2016 at 6:19 PM delete

Great blog.Thanks for taking the time to post such precious information. Quality content is what always gets the visitors coming.

Dear Sir Plz Inform me , What happens in Los IPO?

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July 14, 2016 at 11:04 PM delete

its simple buddy on listing day u can have gain or losses either there r no circuit limits on that day if it gets listed at a lower price depending on market demand your buying price would b higher n market price would b less with loss getting reflecting in ur demat. Same way as it happens in case of other stock

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