L&T Tech pares early gains in tepid market debut
Other | Photo Credit: Reuters

L&T Technology Services Ltd made a muted start on the stock exchanges on Friday with its shares listing at a 4.6% premium to the issue price but losing almost all the gains at close.

Shares of the research and development unit of engineering giant Larsen & Toubro Ltd began trading at Rs 900 on the BSE, compared with the initial public offering price of Rs 860 apiece, and rose to Rs 920 in morning trade.

The shares closed at Rs 865.10, giving the company a market valuation of Rs 8,797 crore ($1.3 billion). The benchmark Sensex ended 0.36% lower.

The listing comes after the company’s IPO was oversubscribed, adding to the list of firms that successfully navigated their public issues this year.

L&T Technology’s debut is better than that of another group firm, L&T Infotech Ltd, which listed on the bourses in July at a discount to its issue price. Shares of L&T Infotech have fallen further since listing.

L&T Technology had a slow start to its IPO, with just under a fifth of the issue covered at the end of day 1, but saw institutional investors get more active on the second day. Overall, the issue elicited bids worth 2.5 times.

Institutional investors bid for five times the number of shares reserved for them. Retail investors’ portion was oversubscribed 72% while corporate houses and high net-worth individuals bid for just about the total shares reserved for them.

The firm is the fourth group firm to list on stock exchanges. Parent L&T has been a public firm for decades while the group's financial services arm, L&T Finance Holdings Ltd, floated its IPO five years ago. L&T Infotech floated its IPO in July.

L&T Technology offers R&D solutions for industries such as industrial products, transportation, aerospace and telecom. It also offers services in areas such as mechanical engineering, embedded systems, besides proprietary solutions in engineering data analytics, and the Internet of Things (IoT). 

The company was set up in January 2014 by carving out the product engineering services segment from L&T Infotech. The integrated engineering business from L&T was then transferred to the new entity in April 2014.

The issue was managed by JM Financial, Kotak Investment Bank, Bank of America Merrill Lynch and SBI Capital Markets.

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