LTIMindtree down 2%; sheds 9% in four days after market debut

Shares of LTIMindtree, the merged entity of Larsen and Toubro Infotech (LTI) and Mindtree, were 2 per cent down to Rs 4,588.95 on the BSE in Thursday’s otherwise firm market.

The stock of the Larsen & Toubro (L&T) Group was quoting lower for the fourth straight day, having fallen 9 per cent during this time, after listing of its additional shares under its new name from December 5.

Around 120 million equity shares of Re 1 each, issued after the amalgamation of LTI and Mindtree, were listed and permitted for trading on the exchange with effect from Monday, December 05, 2022.

The merger formalities of LTI and Mindtree were concluded on November 14, 2022. Shareholders of erstwhile Mindtree, which was delisted on November 23, 2022, have been issued 73 shares of LTI (now LTIMindtree) for every 100 shares held in Mindtree. The parent company, L&T, holds 68.73 per cent of LTIMindtree.

The integration of both entities has completed smoothly with a few changes in terms responsibility and without any attrition at the senior management level.

LTIMindtree has emerged as the fifth largest IT services player in terms of market capitalization post-merger. The larger scale will help it gain direct access to the board room, instead of bidding via RFPs. This should improve its ability to tap larger deals (of over $100 million) as compared to one-off cases at present, said Motilal Oswal Financial Services (MOFSL). 

"The combined entity will benefit from more diverse capabilities with LTI possessing strong cloud, data, and ERP capabilities, and Mindtree sporting strong ecommerce, digital marketing, and customer experience capabilities. This will help the combined entity provide end-to-end solutions to its clients. We expect a wider set of offerings to create a value proposition for its existing clients and increase the wallet share per clients", the brokerage said in a note.

It further expects the combined entity to benefit from strong revenue synergies in the form of strong cross-sell and up-sell opportunities, diverse capabilities, and access to larger deals. Margin may see an uptick as LTIMindtree scales up, it said giving a ‘neutral’ rating and target price of Rs 4,950 per share.