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On Tuesday’s trading session, the shares of an Indian multinational enterprise engaged in EPC Projects surged by 1.5 percent to Rs. 3,685, after the company’s semiconductor arm acquired SiliConch Systems Private Limited for a total of Rs. 183 crores. 

At 10:39 a.m., the shares of Larsen & Toubro Limited were trading in the green at Rs. 3,668.4, up by 1.04 percent, as against its previous closing price of Rs. 3,630.6, with a market cap of Rs. 5.04 lakh crore. 

What’s the news: 

According to the 9th July regulatory filings with the stock exchanges, L&T Semiconductor Technologies Limited (LTSCT), a wholly-owned subsidiary of L&T, entered into a Share Purchase Agreement to acquire a 100 percent stake in SiliConch Systems Private Limited. 

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About the acquisition: 

The acquisition is expected to add intellectual property (IP), engineering skillsets and design expertise to strengthen the Group’s presence in the fabless semiconductor business, thus aligning with the overall growth strategy of LTSCT. 

The acquisition of SiliConch is expected to be completed by 15th September 2024. The total cost of the acquisition is Rs. 183 crore. This includes an upfront payment of Rs. 133 crore at the time of closing the deal, subject to some standard adjustments. 

Additionally, there is a deferred payment of Rs. 50 crore over the next 4 years, which is also subject to closing adjustments and the achievement of certain targets and other conditions. 

What is SiliConch Systems: 

Headquartered in Bangalore and incorporated in 2016, Siliconch Systems Private Limited specialises in the development/design of semiconductor Intellectual Property (IP) / Integrated Circuits (IC). 

It is a fabless semiconductor design firm that develops System-on-Chip IP and has 30 granted patents across various regions. 

The end customers of IPs delivered by SiliConch are Original Equipment Manufacturers (OEMs) and/or fabless IC companies, primarily based in the U.S., which use SiliConch’s IPs to create power management systems for smartphones, PCs, automotive applications, IoT, and accessories. 

SiliConch generates revenue primarily through non-recurring engineering (NRE) revenue and license fees. For the fiscal years 2023-2024 and 2022-2023, its operational revenue stood at Rs. 27.68 crores and Rs. 19.97 crores, respectively. 

Financials: 

In Q4 FY23-24, the company generated Rs. 67,078 crore in operating revenue, a 15 percent growth from Rs. 58,335 crore recorded in Q4 FY22-23. The net profit also rose by around 12.5 percent reaching Rs. 5,003.5 crore, up from Rs. 4,446.7 crore in the same period of the previous fiscal year. 

Stock Performance: 

The stock has delivered nearly positive returns of nearly 50.2 percent in one year, and around 3.3 percent returns in the last six months. So far in 2024, the shares of Larsen & Toubro Limited have given positive returns of about 4.4 percent. 

About the company: 

Larsen & Toubro Limited is an Indian multinational engaged in Engineering-Procurement-Construction (EPC) Projects, Hi-Tech Manufacturing and Services, operating in more than 50 countries globally. 

Written by Shivani Singh 

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