Shares of two Larsen & Toubro (L&T) technology companies saw selling pressure on Friday as hopes of a merger announcement rose today. These two IT firms are Mindtree and Larsen & Toubro Infotech (LTI).
Speculations about a merger between the two companies have gained momentum since last month.
Was trading on LTI at around 2.16 pm 4630 down together 136.55 or 2.86% on BSE. Shares dive to intraday lows 4486.30 each.
Wherein, Mindtree shares traded less than 3401.00 each 109.90 or $3.13 on BSE. Shares plunge to day’s low 3280 per.
According to the report of PTI, L&T Chairman AM Naik is to have a press conference at around 4 pm today.
There is talk that L&T – which has controlling stake in both the companies – may consider a merger between LTI and Mindtree.
At present, L&T holds 61 per cent stake in Mindtree and 74 per cent in LTI. Mindtree was acquired by L&T Group in 2019.
Last month, a Bloomberg report said the two companies have minimal overlap in businesses or customers, and a tie-up would give them better pricing power and lower costs. The board of Mindtree and LTI may consider the share swap ratio for the merger.
Earlier, IIFL had said in its note that according to media reports, the boards of L&T Infotech (LTI) and Mindtree (MTCL) may soon consider the merger of the two companies. While both have clarified that the reports are speculative, the potential merger has been treated as an event since the acquisition of Mindtree by L&T (the group parent) in March 2019.
IIFL pointed out that both the companies have complementary capabilities, scope and client exposure. It added, “We believe this cannot be a bad time to initiate the process of merger, as both the companies now have similar growth and margin profiles, with a strong FY23 outlook.”
Highlighting the swap ratio scenario for the merger, the IIFL note states that the swap ratios are not known, however, L&T owns around 74% in LTI and 61% in Mindtree, while LTI is at a 10% premium to Mindtree. doing business on. In mergers of this proportion, the management of the lead transition is the biggest risk; However, the brokerage believes that this must have already been part of the plan since the acquisition of Mindtree.
Both the companies have announced their financial performance for the quarter and year ended March 31, 2022.
In Q4FY22, Mindtree’s net profit was 473.1 crores grew 49.1% year-on-year, while revenue was 2,897.4 crore year-on-year growing 37.4%. In dollar terms, revenue was up 33.2% yoy and 4.8% qoq at $383.8 million.
Meanwhile, in Q4FY22, LTI made a net profit of 637.5 crore, up 16.8% year-on-year and 4.1% quarter-on-quarter. While revenue grew by 31.6% year-on-year and 4% quarter-on-quarter 4,301.6 crores. Constant currency revenue growth stood at 29% yoy and 3.6% qoq.