L&T Infotech Ltd, the software services arm of engineering giant Larsen & Toubro Ltd, made a tepid debut on stock exchanges on Thursday with its shares dropping 6.1% from the issue price.
The shares of India’s sixth-largest IT services exporter listed at Rs 666.60 apiece on the BSE compared with the initial public offering price of Rs 710. The shares rose to a high of Rs 701 before closing at Rs 697.65 apiece, giving it a market value of Rs 11,849 crore ($1.7 billion).
The 30-stock benchmark Sensex fell 0.74% while the BSE Information Technology index was little changed.
The weak show comes after the company's IPO was subscribed 11.7 times earlier this month, after getting fully covered on the first day itself.
L&T Infotech's muted opening is in contrast to strong debuts by a number of companies in recent months including staffing firm Quess Corp, diagnostics firm Thyrocare Technologies Ltd and microlender Equitas. Indian IT companies, however, have been weighed down in recent months by concerns of slowing demand for software services from global clients, particularly after the uncertainty due to Britain’s decision to leave the European Union.
Wipro Ltd, the country’s third-largest IT services exporter, and second-ranked Infosys Ltd reported disappointing earnings for the April-June quarter. Infosys also cut its revenue growth outlook for the current financial year. Wipro gained 0.7% on Thursday but Infosys fell 0.25%, extending the drop to 15% since touching a one-year high in early June.
L&T Infotech's IPO was an offer for sale of 17.5 million shares. This included 5.25 million shares the company sold to anchor investors including private equity firm ChrysCapital and several mutual funds to raise Rs 372.75 crore. It allotted the shares at the upper end of its Rs 705-710 price band and raised about Rs 1,240 crore through the IPO, including the anchor portion.
The software services company is the third group firm to list on stock exchanges. While parent L&T has been a public firm for decades, the group's financial services arm L&T Finance Holdings Ltd floated its IPO five years ago. The group's engineering research and development unit, L&T Technology Services Ltd, filed for its IPO last week.
L&T Infotech had first filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in September. The capital markets regulator cleared the IPO proposal in January. It refiled the DRHP in April due to a change in the offer structure. SEBI cleared the revised DRHP in May.
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