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L&T Infotech’s market debut fails to shine
MUMBAI: Shares of Larsen & Toubro Infotech, the software services unit of engineering giant Larsen & Toubro, made a lacklustre debut on Thursday, with the stock
MUMBAI: Shares of Larsen & Toubro Infotech, the software services unit of engineering giant Larsen & Toubro, made a lacklustre debut on Thursday, with the stock ending down 1.7% on first day of trading.
The stock opened at ₹666.60 on BSE, versus the issue price of ₹710. It hit a low of ₹666, before closing at ₹697.65.This is the first issue in almost four months to end lower on its debut.
L&T Infotech shares got subscribed over 11 times earlier this month. It was among the biggest software services IPOs in recent times, raising little over ₹1,200 crore.
It had raised ₹373 crore from 22 anchor investors including Auburn Ltd, ICICI Prudential, HDFC Trustee Company, Birla Sun Life MF among others.
The disappointing first quarter earnings growth reported by companies such as Infosys, Wipro and TCS dampened investor sentiments, said traders.
Also, analysts said L&T Infotech didn’t offer anything significantly different or attractive, compared with the other listed peers in the sector.
“L&T Infotech has a relatively inferior business mix as compared to the large-cap and some of its mid-cap peers. ADM (application development and maintenance) accounts for over 42% of its revenues, which is depicting a visible deceleration across the companies, with the incremental discretionary spend being directed towards digital technology,” Vibhor Singhal of Phillip Capital said in a note.
A few other analysts pointed to company’s frequent leadership changes in the last few years and it missing out on several strategic inorganic deals, as some of the negatives.
Sudip Banerjee, the chief executive officer of L&T Infotech had stepped down in 2011.
That was followed by the exit of joint CEOs Vivek Chopra and Mukesh Aghi in October 2014 after just two years in charge and then Chandrasekhar Kakal, who had joined as chief operating officer, left in August last year after just 15 months.
“L&T Infotech revenue growth track record remains patchy at best with company missing out on revenue milestones and failing to hit the $1 billion revenue mark even 6 years after the original goal post,” analysts at Emkay Global Financial Services said.
