L&T Infotech, the IT unit of engineering giant Larsen and Toubro, listed at Rs 666.6 on its trading debut at the Bombay Stock Exchange (BSE), 6.11 percent below its issue price of Rs 710. The stock erased some early trading losses intraday but still closed down 1.74 percent below its issue price, at Rs 697.65 at the BSE on day one.
L&T Infotech’s Rs 1,243 crore initial public offer (IPO) had been subscribed 11.69 times and the issue was priced at the upper end of the price band of Rs 705-710 per share.
But the stock was one of the few to be traded at a discount on debut, with analysts of the view that the gloomy earnings outlook for Indian IT giants appeared to have a bearing on the trading sentiment for L&T Infotech.
“The headwinds which the IT sector has been facing in the past week are real and apparent. So some pressure came on the stock,” an IT analyst with a foreign brokerage firm said, declining to be named due to company policy.
Bigger rivals such as Infosys Ltd and Tata Consultancy Services have reported weaker-than-expected Q1FY17 earnings growth and spoken about a challenging global environment, particularly in the wake of uncertainties surrounding Brexit. Europe is the second biggest market for India’s IT outsourcing sector.
Most equity research firms had, prior to its listing, recommended investors to subscribe for the L&T Infotech IPO due to its attractive valuations.
L&T Infotech is India’s sixth largest Indian IT company by export revenues. Total income for the company rose by 21 percent to Rs 6,143.02 crore for the 12 months ended March 2016, while net profit came in at Rs 922.17 crore for the same period, data from the firm’s FY16 annual report showed.
The company has clients across North America, Europe and the Asia-Pacific region in the banking and financial services, insurance, energy, retail and pharmaceuticals, media and entertainment and automotive segments.
The North American region contributes 70 percent to its total revenues and Europe 17.4 percent.
Check out our Festive offers upto Rs.1000/- off website prices on subscriptions + Gift card worth Rs 500/- from Eatbetterco.com. Click here to know more.