20/07/2016
13/07/2016 (Day 3)
At the end of Day 3 : L&T InfoTech IPO was finally subscribed as :
- Overall : 11.69 QIB : 19.91x , HNI 10.76x, Retail : 7.39x
12/07/2016 (Day 2)
At the end of Day 2 : L&T InfoTech IPO was subscribed as :
- Overall : 3.58 QIB : 5.36x , Retail : 3.81x , HNI .63x
- Retail Application wise subscription stood at 1.74 x
L&T Infotech IPO has been subscribed 3.1 x on overall basis at 1500 Hrs
Even after a good response to IPO, Grey market both on application basis & firm basis continues to go down. Though this issue is not of same class as Mahanagar Gas , Ujjivan or Quess Corp , Retail IPO investors willing to take some risk and reconciled to possibility of low listing gains may apply.
11/07/16 ( Day 1)
Even after a relatively good response, there has been a fall in Grey market premium today by 10-20% indicating wavering of investors and operator’s faith in the issue in terms of its ability to give desired listing gains.
L&T Infotech IPO elicited good response in the opening hours on Day 1 and was subscribed 1.23 x on overall basis with QIB 1.76 x and retail 1.38 x.
L&T Infotech IPO elicited good response in the opening hours on Day 1 and was subscribed 79% by 1300 Hrs
10/7/16
Despite some concerns on IT sector , company’s lack of differentiation and large concentration in BFSI, the L&T infoTech on account of reasonable valuations and current rush for IPOs should see reasonable demand. Would be interesting to see demand from QIBs in view of above fears which mainly relate to scenario for IT sector.
Brokerage Views :
Subscribe
- Reliance Securities: Discount to peers a booster : Subscribe
- IIIFL: IPO a long-term buy, huge listing gains : Subscribe
- Angel Broking: Subscribe. Listing gains
- Ajcon Capital : Subscribe
- Antique Stock Broking: Digital contribution, L&T parentage hold key Subscribe
- GEPL Capital: Subscribe rating to the IPO
- ShareKhan : company’s valuation at the offer price looks attractive
- GEPL Capital : Subscribe
- Hem Securities : Subscribe
- Arihant Capital : Subscribe
- Choice Capital : Subscribe
- Capital Market : 48/100, Good Retention rate.
- SP Tulsian : Left on the table pricing
Middle of the Road
- Hindu Business Line : Cheap, but no key differentiator
- Economic Times : Various Artciles
- Centrum Wealth Management
Avoid Or Neutral
- Philips Capital : Avoid
- Business Standard : May be skipped
08/97/2016
Anchor Allotment : L&T Infotech on Friday raised Rs 373 crore from 22 anchor investors by selling shares at a price of Rs 710 apiece ahead of its initial share sale next week. As many as 22 anchor investors, which include Auburn Ltd , General Insurance Corp, Among the anchor investors are BNP Paribas, HDFC Trustee Co, Prudential ICICI, Global Strong Growth Fund, Shriram Life Insurance, Reliance Capital, TATA AIA Life, FIL Investments (Mauritius) Ltd,ICICI Technology Fund, Birla Sun Life Trustee Co. Pvt. Ltd, Max Life Insurance Co. Ltd , NTAsian Emerging Leaders Fund.Union Bank of India and New India Assurance etc.
As a matter of fact Auburn Ltd, the public market investment arm of private equity fund ChrysCapital Investment Advisors India Pvt. Ltd, bought shares worth Rs.160 crore, nearly 43% of the total anchor book.
News : Company was actively in news on various fronts
- CEO addresses 5 key concerns over IPO https://t.co/ZtzeK1OMLx
- UDAY KOTAK: L&T Infotech Biggest It Company To List In Last Decade
- L&T Infotech looking for buyouts in analyticals
- L&T Infotech to expand presence in “Internet of Things”
Even as IL&T InfoTech is coming at a fair price and till today a grey market premium of Rs. 80-90 exists on the IPO rate of 710/-, the IPO may no where be able to recreate the magic of Quess Corporation & MahaNagar Gas.
This negative sentiment stems from :
- Feeling that growth of Indian IT companies shall be under pressure for net 2-3 years
- Run of the Mill business model followed by company without sufficient differentiation
- High exposure to BFSI segment
- Frequent management changes in past
Detailed financial performance of L&T InfoTech for last five five years and its comparison with peers on various parameters is indicated below in detail :
L&T Infotech – Profit and Loss- five years | Rs. Million | ||||
Particulars | 2015-16 | 2014-15 | 2013-14 | 2012-13 | 2011-12 |
Revenue from operations | 58470.6 | 49780.36 | 49204.98 | 38514.39 | 31820.15 |
Total income | 61430.21 | 50695.36 | 48371.8 | 38735.43 | 31915.99 |
Operating profit | 13315.76 | 10959.57 | 10639.65 | 8925.95 | 6993.47 |
Finance cost | 103.57 | 104.19 | 305.34 | 208.12 | 342.42 |
Profit before extraordinary items and tax | 11472.67 | 9275.98 | 9034.56 | 7486.15 | 5602.42 |
Profit Before Tax | 11472.67 | 9266.26 | 8541.36 | 6778.37 | 5602.42 |
Current tax | 1649.17 | 1630.45 | 1681.03 | 1631 | 1289.27 |
Deferred tax | 600.44 | 35.76 | 261.85 | 46.99 | 119.79 |
2249.61 | 1666.21 | 1942.88 | 1677.99 | 1409.06 | |
Net profit after tax bef extra Ord | 9223.06 | 7608.08 | 6962.43 | 5616.62 | 4193.36 |
Extraordinary item (net of tax) | – | 79.08 | 3002.42 | – | – |
Net profit after tax as restated | 9221.77 | 7691.61 | 9283.42 | 5737.26 | 4331.48 |
Share capital | 169.82 | 161.25 | 161.25 | 161.25 | 161.25 |
Reserves and surplus | 20057.02 | 20102.23 | 15941.68 | 13226.74 | 10892.35 |
Total equity | 20226.84 | 20263.48 | 16102.93 | 13387.99 | 11053.6 |
L&T infotech Financial Ratios | |||||
Price | 710 | 710 | 710 | 710 | 710 |
EPS | 54.3 | 47.7 | 57.6 | 35.6 | 26.9 |
PE | 13.1 | 14.9 | 12.3 | 19.9 | 26.4 |
Revenue % growth | 14.9 | 1.2 | 21.7 | 17.4 | |
Operating Profit Margin | 22.8 | 22 | 21.6 | 23.2 | 22 |
Net profit Margin | 15.8 | 15.3 | 14.1 | 14.6 | 13.2 |
Return on Net worth | 45.6 | 37.5 | 43.2 | 42 | 37.9 |
L&T Infotech vs Peers : year 2016 | * Figures in Rs. Crore | |||||||||
Name | Sales (2016) | Net Profit | Face Val | CMP Rs. | Eq Cap | Market Cap | EPS | P/E | RONW | Div yld% |
TCS | 1,08,646 | 24291 | 1 | 2,501 | 197.04 | 4,92,797 | 123.28 | 20.29 | 41.3 | 1.7 |
Infosys | 62,441 | 13490 | 5 | 1,172 | 1144.00 | 13,41,226 | 58.96 | 19.88 | 25.2 | 2.1 |
Wipro | 51,248 | 8960 | 2 | 559 | 494.10 | 2,76,152 | 36.27 | 15.41 | 21.4 | 1.1 |
HCL Tech | 30,781 | 5605 | 2 | 732 | 281.20 | 2,05,754 | 39.86 | 18.35 | 32.8 | 2.3 |
Tech Mahindra | 26,494 | 3156 | 5 | 511 | 480.40 | 2,45,677 | 32.85 | 15.57 | 24.5 | 1.2 |
L&T Info | 6,143 | 922 | 1 | 710 | 16.98 | 12,056 | 54.30 | 13.08 | 49.5 | 4.6 * |
Oracle Fin.Serv. | 4,092 | 1166 | 5 | 3,459 | 42.31 | 1,46,369 | 137.79 | 25.11 | 19.5 | 19.2 |
Mphasis | 6,087 | 669.38 | 10 | 569 | 210.15 | 1,19,628 | 31.85 | 17.87 | 12.4 | 2.8 |
Cyient | 3,095 | 314.79 | 5 | 486 | 56.18 | 27,301 | 28.02 | 17.35 | 20.6 | 0.6 |
L&T Vs Peers | Sales | Sales CAGR | ||||||
Name | sales-fy12 | sales-fy13 | sales-fy14 | sales-fy15 | sales-fy16 | yoy | 3 yrs | 4 Yrs |
infosys | 33734 | 40352 | 50133 | 53319 | 62441 | 17.1 | 15.7 | 22.8 |
wipro | 37404 | 37685 | 43755 | 47318 | 51631 | 9.1 | 11.1 | 11.3 |
HCL Tech | 20830.55 | 25581.06 | 32143.66 | 36701.22 | 40197 | 9.5 | 16.3 | 24.5 |
Tech Mahindra | 5490 | 6873 | 18831 | 22621 | 26494 | 17.1 | 56.8 | 69 |
L&T info | 3182 | 3851 | 4920 | 4978 | 5847 | 17.5 | 14.9 | 22.5 |
Mphasis | 5357.33 | 5796.3 | 2593.63 | 5794.81 | 6087.88 | 5.1 | 1.6 | 4.4 |
Cyient | 1553 | 1873 | 2206 | 2736 | 3096 | 13.2 | 18.2 | 25.9 |
L&T Info vs Peers | Operating Profit | OP CAGR | ||||||
OP-fy12 | OP-fy13 | OP-fy14 | OP-fy15 | OP-fy16 | yoy | 3 yrs | 4 Yrs | |
infosys | 10727 | 11538 | 13390 | 14883 | 17129 | 15.1 | 14.1 | 16.9 |
wipro | 7032.2 | 7657.4 | 9635.3 | 10299.2 | 10582.9 | 2.8 | 11.4 | 14.6 |
HCL Tech | 3695.17 | 5661.16 | 8035.29 | 8472.58 | 8623.69 | 1.8 | 15.1 | 32.6 |
Tech Mahindra | 850.3 | 1355.9 | 4183.8 | 4152.9 | 4342 | 4.6 | 47.4 | 72.2 |
L&T info | 699.35 | 892.60 | 1063.97 | 1095.96 | 1331.58 | 21.5 | 14.3 | 23.9 |
Mphasis | 1048.92 | 1032.58 | 431.14 | 866.92 | 841.48 | -2.9 | -6.6 | -7.1 |
Cyient | 267.51 | 340.54 | 410.22 | 399.5 | 412.05 | 3.1 | 6.6 | 15.5 |
L&T Info vs Peers | Net Profit | NP CAGR | ||||||
NP-fy12 | NP-fy13 | NP-fy14 | NP-fy15 | NP-fy16 | yoy | 3 yrs | 4 Yrs | |
infosys | 13678 | 12372 | 10656 | 9429 | 8332 | -11.6 | -12.3 | -15.2 |
wipro | 5604.5 | 6150.1 | 7947.1 | 8660.9 | 8959.7 | 3.4 | 13.4 | 16.9 |
HCL Tech | 2422.7 | 4040.09 | 6509.51 | 7317.07 | 7489.11 | 2.4 | 22.8 | 45.7 |
Tech Mahindra | 1095.5 | 1287.8 | 3028.8 | 2627.7 | 3118.02 | 18.7 | 34.3 | 41.7 |
L&T info | 419.34 | 561.66 | 696.24 | 760.81 | 922.31 | 21.2 | 18 | 30 |
Mphasis | 792.32 | 743.8 | 302.68 | 674.64 | 669.38 | -0.8 | -3.5 | -5.5 |
Cyient | 161.38 | 231.06 | 266 | 353.2 | 326.25 | -7.6 | 12.2 | 26.4 |
Employee efficiency Ratios | *Figs in Rs. | ||||||
TCS | infosys | Wipro | HCL Tech | L&T infotech | Tech M | Cyient | |
approx no of employees | 335620 | 194044 | 172912 | 104896 | 21073 | 105432 | 12500 |
Revenue / Employee | 32,37,173 | 8,82,738 | 29,63,808 | 29,34,430 | 29,15,115 | 31,99,598 | 24,76,000 |
Operating Profit / Employee | 9,11,418 | 8,82,738 | 6,12,040 | 8,22,118 | 6,31,887 | 4,11,829 | 3,29,640 |
Net Profit / Employee | 7,23,765 | 6,95,203 | 5,18,183 | 5,34,339 | 4,37,527 | 38,27,301 | 2,51,832 |
This entire analysis indicates that L&T IPO is reasonably priced but uncertain outlook and other factors are acting as a deterrent.