LTI-Mindtree merged entity ‘LTIMindtree’ falls 2% on listing

Shares of LTIMindtree, the merged entity of Larsen & Toubro Infotech (LTI) and Mindtree, begin trading on the domestic bourses today. Last month, the Larsen & Toubro (L&T) Group companies had announced their merger, one of the largest in the Indian IT sector, in a share swap deal at a ratio of 73 shares of LTI for every 100 shares of Mindtree. Parent company L&T holds a 68.69% stake in the merged entity, LTIMindtree. 

LTIMindtree shares opened trade at ₹5,060.05, marginally lower against the previous closing price of ₹5,068 on the Bombay Stock Exchange (BSE). During the session, the stock declined as much as 2.1% to hit an intraday low of ₹4,963, while it touched a high of ₹5,120.40 on the BSE. Finally, the stock settled day’s trade at ₹4,974.50, down 1.7%.

With a market capitalisation of ₹1.47 lakh crore, the merged entity, LTIMindtree, has become the country's fifth-largest IT services provider by market cap after Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies.

The two L&T Group companies had announced their intent to merge in May 2022, which was later approved by their respective shareholders, and creditors. In 2019, L&T had acquired a controlling stake in Bengaluru-based Mindtree in the country’s first hostile takeover bid in the IT space. In 2019, L&T initially acquired a 20.4% share in Mindtree from coffee baron late V.G. Siddhartha and affiliate firms, followed by 31% additional stake through an open offer. L&T currently owns 60.95% shares in the mid-sized IT company.  

The merger of the two independently listed companies as LTIMindtree, a scaledup IT services provider with a client portfolio of more than 750 leading global enterprises from all key industry verticals, and nearly 90,000 professionals spread in more than 30 countries across five continents. “The highly complementary strengths of LTI and Mindtree make this integration a win-win proposition for all our stakeholders — clients, partners, investors, shareholders, employees, and communities — furthering L&T’s tradition of innovation, excellence, trust, and empathy,” A. M. Naik, group chairman of L&T and Chairman of LTIMindtree, had said on the merger.

For the second quarter ended September 2022, L&T Infotech reported a 23% year-on-year rise in net profit at ₹680 crore, while the consolidated revenue from operations rose 28.39% to ₹4,836.7 crore. In U.S. dollar terms, the company registered revenue of $601 million in Q2FY23, up 18.1% against the corresponding period of the past fiscal.

Meanwhile, Mindtree posted a 27.5% YoY rise in net profit to ₹509 crore, while consolidated revenue climbed 31.5% YoY to ₹3,400 crore.