The shares of L&T Technology Services Ltd (LTTS) plunged 6.55% on Friday’s early trades to reach an intraday low of ₹ 3404.20 apiece on the National Stock Exchange (NSE). Its shares were trading at ₹ 3412.65 apiece at 12:05 PM on Monday.
This happened after the company announced that it plans to acquire the Smart World & Communication (SWC) business of Larsen & Toubro Ltd (L&T), its parent company, in a ₹ 800 crore deal.
According to L&T, the revenue of the carved-out business for FY 2021-22 was ₹ 1,098 crore (including inter-segment revenues) and the networth was ₹ 440 crore.
The business will be transferred to L&T Technology Services on a slump sale basis and is expected to be closed before March 31, 2023. The transaction excludes the military communications segment and certain identified customer contracts.
Smart World & Communication was founded in 2016 to cater to the demands in smart cities, address opportunities and provide smart solutions in the areas of end-to-end communications, city surveillance and intelligent traffic management system for the Government as well as enterprises. It has an employee base of over 700 engineers from diversified technology domains.
5G is expected to have a global impact of $1.3 trillion by 2030 and LTTS with SWC believes that together, it is in a stronger position to continue to win and execute large-scale transformational programs in India and globally in this segment.
In the past five years, The company’s shares surged 244.62% to give multibagger returns. If an investor would have invested ₹ 1 lakh in the company’s shares five years ago, the value of their holdings would have been ₹ 3.45 lakhs today!
With a market capitalization of ₹ 38,466 crores, LTTS is a large-cap company. It has a good return on equity of 25.07% and an ideal debt-to-equity ratio of 0.10. Further, its promoters hold a 73.85% stake in it.
Written by Simran Bafna
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