L&T Technology Services IPO Off To A Slow Start

The public issue of L&T Technology Services (for Rs 894 crores), which is a wholly owned subsidiary of engineering & construction giant L&T, opened for subscription on Monday, 12th September 2016. The price band is fixed at Rs 850 to 860 per share, which according to the market experts is a rather pricey one.The 1.04 crores equity shares issue is an offer for sale by the parent company L&T. Therefore, the engineering, research and development (ER&D) services provider will not get any money from the IPO that will close on 15th September 2016.L&T Technology Services provides services in the field of ER&D, which is defined as the set of services provided for manufacturing, technology as well as process engineering companies, to help them develop and build products, processes and infrastructure required to deliver products as well as services to their end customers.

The Monday ReviewAmong the global selloff in equities segment, the initial public offering (IPO) of L&T Technology Services (LTTS) saw a slow start on Monday.Data compiled from both the exchanges’ (NSE and BSE) websites depicted the issue had received bids for 12.94 lakhs shares, or 18 per cent, of the total issue size (72.80 lakhs). Retail investors opted for 19 per cent of the quota limit of around 36.40 lakhs shares. The quota for qualified institutional buyers saw about 27.83 per cent bids of the total size, non-institutional investors 1 per cent.The engineering and research and development (ER&D) services provider from the stable of capital goods major Larsen and Toubro hit the market with the public offering to raise around Rs 894.40 crores in the price band at Rs 850 to 860. The issue will continue till 15th September 2016, Thursday.The company had last week allocated 31,20,000 of equity shares to anchor investors amounting to a total of Rs 268.32 crores. Including the anchor investor portion, the company is looking forward to sell off about 1.04 crores shares in the price band of Rs 850 to 860. The stake sale by existing shareholders would fetch them about Rs 894 crores.After the IPO, L&T’s stake in the firms will reduce to 89.8 per cent.This IPO can be compared with listed entities like the Tata Elxsi and Cyient. At the upper end of the price band at Rs 860, the PE for L&T Technology at basic Financial Year 2016 EPS of Rs 43.52 stands at 19.76. On a diluted EPS basis, the PE for the Company stands at Rs 26.79 apiece. This is against a PE of 37.8 for Tata Elxsi and 14.7 for Cyient.

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