L&T Infotech, Mindtree extend fall ahead of merger, down up to 7% in 3 days

Shares of L&T Infotech (LTI) and Mindtree were down 3 per cent each on the BSE in Thursday’s intra-day trade, extending their fall in the past two trading sessions after the companies fixed November 24, 2022 as the record date for determining eligibility of the shareholders for allotment of merger entitiy shares. Mindtree will turn ex-date for amalgamation on November 23, 2022.

Shares of Mindtree traded 3 per cent lower at Rs 3,518, down 7 per cent in past three trading days, while LTI down 3 per cent at Rs 4,902.85, has slipped 5 per cent during the period. In comparison, the S&P BSE Sensex was down 0.13 per cent at 61,901 at 09:43 am.

On Monday, November 14, LTI & Mindtree informed the stock exchanges that they received the approval for merger from both Bangalore & Mumbai NCLT Benchs. LTI Mindtree shall start operating as a merged entity, effective November 14, 2022.

As part of the merger, all shareholders of Mindtree will be issued shares of LTI in the ratio of 73 shares of LTI for every 100 shares of Mindtree. The parent company, L&T, will hold 68.73 per cent. The company has appointed Debashis Chatterjee as CEO & MD for period of 3 years till November 2025, Venugopal Lambu as Whole Time Director for a period 3 years till November 2025 and Vinit Teredesai as CFO.

Both the companies while declaring their Q2 results had indicated that the merger proceedings are in the last leg of regulatory approvals. Merged entity will now be the 5^th largest IT services company with market capitalization of over Rs 1,50,000 crore.

Current market prices are largely as per swap ratio. The companies are looking for faster integration by Q4FY23. The combined entities will be have access to over 750+ clients & 90,000+employees and minimal overlapping (24% of the revenue mix). As on H1, the combined entity has over Rs 15,000 crore of revenues and 19 per cent+ EBITDA margin, ICICI Securities said in a note.

In the past six months shares of Mindtree and LTI performed in line with the market by gaining around 15 per cent. However, in past one year, LTI has declined 33 per cent and Mindtree 29 per cent, as compared to 3 per cent rise in the S&P BSE Sensex.