LTIMindtree share drops 10% in four days after listing

Share of LTIMindtree, the merged entity of Larsen & Toubro Infotech (LTI) and Mindtree, continued its losing streak for the fourth straight session on Thursday after listing of its stocks under its new name on December 5. The stock of the new entity has tumbled nearly 10% since its market debut as compared to a 0.9% fall in the BSE benchmark Sensex. Last month, the L&T group companies announced their merger, one of the largest in the Indian IT sector, in a share swap deal at a ratio of 73 shares of LTI for every 100 shares of Mindtree.

Extending losses, LTIMindtree share price declined as much as 2.4% to hit an intraday low of ₹4,575 on the BSE, while the market capitalisation of the country's fifth-largest IT services firm dropped to ₹1.36 lakh crore. Earlier today, the IT stock opened a tad higher at ₹4,690, against the previous closing price of ₹4,686.60 on the BSE. LTIMindtree shares hit a 52-week high of ₹7,595.25 on January 4, 2022, while it touched a 52-week low of ₹3,733.25 on May 26, 2022.

LTIMindtree made its market debut on December 5 after 12 crore equity shares of ₹1 each were listed and permitted for trading on the exchange following the merger of erstwhile Mindtree, which was delisted on November 23, with LTI. Following the amalgamation, LTIMindtree has become the country's fifth-largest IT services provider by market cap after Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies. The parent company, Larsen & Toubro (L&T), holds a 68.73% stake in the new entity.

The two L&T Group companies had announced their intent to merge in May 2022, which was later approved by their respective shareholders, and creditors. In 2019, L&T acquired a controlling stake in Bengaluru-based Mindtree in the country’s first hostile takeover bid in the IT space. In 2019, L&T initially acquired a 20.4% share in Mindtree from coffee baron late V.G. Siddhartha and affiliate firms, followed by a 31% additional stake through an open offer. L&T currently owns 60.95% shares in the mid-sized IT company.  

For the second quarter ended September 2022, L&T Infotech reported a 23% year-on-year rise in net profit at ₹680 crore, while the consolidated revenue from operations rose 28.39% to ₹4,836.7 crore. In U.S. dollar terms, the company registered revenue of $601 million in Q2FY23, up 18.1% against the corresponding period of the past fiscal.

Meanwhile, Mindtree posted a 27.5% YoY rise in net profit to ₹509 crore, while consolidated revenue climbed 31.5% YoY to ₹3,400 crore.