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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 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.

 

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