L&T Infotech : Run Up to IPO

L&T info logo

20/07/2016

Check L&T Infotech IPO status

 

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 yearsRs. Million
Particulars2015-162014-152013-142012-132011-12
Revenue from operations58470.649780.3649204.9838514.3931820.15
Total income61430.2150695.3648371.838735.4331915.99
Operating profit13315.7610959.5710639.658925.956993.47
Finance cost103.57104.19305.34208.12342.42
Profit  before  extraordinary  items and tax11472.679275.989034.567486.155602.42
Profit Before Tax11472.679266.268541.366778.375602.42
Current tax1649.171630.451681.0316311289.27
Deferred tax600.4435.76261.8546.99119.79
2249.611666.211942.881677.991409.06
Net profit after tax bef extra Ord9223.067608.086962.435616.624193.36
Extraordinary item (net of tax)79.083002.42
Net profit after tax as restated9221.777691.619283.425737.264331.48
Share capital169.82161.25161.25161.25161.25
Reserves and surplus20057.0220102.2315941.6813226.7410892.35
Total equity20226.8420263.4816102.9313387.9911053.6
L&T infotech Financial Ratios
Price710710710710710
EPS54.347.757.635.626.9
PE13.114.912.319.926.4
Revenue % growth14.91.221.717.4
Operating Profit Margin22.82221.623.222
Net profit Margin15.815.314.114.613.2
Return on Net worth45.637.543.24237.9
L&T Infotech vs Peers : year 2016* Figures in Rs. Crore
NameSales (2016)Net ProfitFace ValCMP Rs.Eq CapMarket CapEPSP/ERONWDiv yld%
TCS1,08,6462429112,501197.044,92,797123.2820.2941.31.7
Infosys62,4411349051,1721144.0013,41,22658.9619.8825.22.1
Wipro51,24889602559494.102,76,15236.2715.4121.41.1
HCL Tech30,78156052732281.202,05,75439.8618.3532.82.3
Tech Mahindra26,49431565511480.402,45,67732.8515.5724.51.2
L&T Info6,143922171016.9812,05654.3013.0849.54.6 *
Oracle Fin.Serv.4,092116653,45942.311,46,369137.7925.1119.519.2
Mphasis6,087669.3810569210.151,19,62831.8517.8712.42.8
Cyient3,095314.79548656.1827,30128.0217.3520.60.6
L&T Vs PeersSalesSales CAGR
Namesales-fy12sales-fy13sales-fy14sales-fy15sales-fy16 yoy 3 yrs4 Yrs
infosys337344035250133533196244117.115.722.8
wipro37404376854375547318516319.111.111.3
HCL Tech20830.5525581.0632143.6636701.22401979.516.324.5
Tech Mahindra5490687318831226212649417.156.869
L&T info3182385149204978584717.514.922.5
Mphasis5357.335796.32593.635794.816087.885.11.64.4
Cyient1553187322062736309613.218.225.9
L&T Info vs Peers Operating ProfitOP  CAGR
OP-fy12OP-fy13OP-fy14OP-fy15OP-fy16 yoy 3 yrs4 Yrs
infosys107271153813390148831712915.114.116.9
wipro7032.27657.49635.310299.210582.92.811.414.6
HCL Tech3695.175661.168035.298472.588623.691.815.132.6
Tech Mahindra850.31355.94183.84152.943424.647.472.2
L&T info699.35892.601063.971095.961331.5821.514.323.9
Mphasis1048.921032.58431.14866.92841.48-2.9-6.6-7.1
Cyient267.51340.54410.22399.5412.053.16.615.5
     
L&T Info vs Peers Net Profit     NP  CAGR
NP-fy12NP-fy13NP-fy14NP-fy15NP-fy16 yoy 3 yrs4 Yrs
infosys13678123721065694298332-11.6-12.3-15.2
wipro5604.56150.17947.18660.98959.73.413.416.9
HCL Tech2422.74040.096509.517317.077489.112.422.845.7
Tech Mahindra1095.51287.83028.82627.73118.0218.734.341.7
L&T info419.34561.66696.24760.81922.3121.21830
Mphasis792.32743.8302.68674.64669.38-0.8-3.5-5.5
Cyient161.38231.06266353.2326.25-7.612.226.4
Employee efficiency Ratios*Figs in Rs.
TCSinfosysWiproHCL TechL&T infotechTech MCyient
approx no of employees3356201940441729121048962107310543212500
Revenue / Employee32,37,1738,82,73829,63,80829,34,43029,15,11531,99,59824,76,000
Operating Profit / Employee9,11,4188,82,7386,12,0408,22,1186,31,8874,11,8293,29,640
Net Profit / Employee7,23,7656,95,2035,18,1835,34,3394,37,52738,27,3012,51,832

This entire analysis indicates that L&T IPO is reasonably priced but uncertain outlook and other factors are acting as a deterrent.

 

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