IPO-bound L&T Tech sees 15% revenue rise this yr;eyes buyouts

L&T Group chairman AM Naik today said the company's IPO-bound engineering services arm is targeting a 15-percentage points increase in revenue to USD 525 million in the current financial year, and USD 1 billion over the next three years through inorganic growth.

"We were at USD 460 million last year and will grow to USD 525 million this year," Naik, who is also the non-executive chairman of the IPO-bound L&T Technology Services, said during a roadshow here.

He said the company wants to double revenue to USD 1 billion over the next three-four years, and will be looking at acquisitions with revenue of USD 150-200 million to achieve the number.
 

Senior company officials said the acquisition will be to gain control over new technologies rather than focused only on expanding revenue. The company's revenue have grown at a compounded rate of 23 per cent per year over the past three years, they added.

Its pre-tax profit margin moved up to 17 per cent last year, largely on the back of the utilisation ratio moving up to 76 per cent from 71.4 per cent in the year-ago period. The attrition was at 13 per cent.

L&T Technology Services' senior officials said a bulk 60 per cent of the revenue comes from North America, followed by 20 per cent from Europe (Germany, plus the Nordic region), and added the impact of Brexit will be limited on it as Britain contributed only 2 per cent of revenue last year.

The company today said it will be hitting the market with the IPO next Monday and raise up to Rs 890 crore at the upper end of the price-band set between Rs 850 and Rs 860.

Parent L&T's will be diluting 10.2 per cent stake through the issue and will have to get its stake down further to 75 per cent in three years.

The company is offering 10.4 million shares of Rs 2 face value as part of the initial public offer.

This is the second market debut from the engineering giant L&T in as many months and retiring chairman Naik said there is no new listing on the anvil from the group.

In a tepid debut, L&T Infotech listed 6 per cent below the listing price of Rs 710 last month and closed up 1 per cent today at Rs 652.10 on the BSE against a Sensex rally of over 1.6 per cent.