L&T Technology eyes $1.3 bn valuation in IPO

Larsen & Toubro Ltd (L&T), India's biggest engineering firm, is seeking a valuation of as much as Rs 8,745 crore ($1.3 billion) for unit L&T Technology Services Ltd through an initial public offering later this month.

L&T will sell 1.04 crore shares, or a 10.2% stake, in its engineering research and development unit in a price band of Rs 850-860 apiece, it said in a stock-exchange filing.

The issue opens on 12 September and closes on 15 September. L&T will raise about Rs 900 crore through the offering. The parent company has a market value of about Rs 1,39,400 crore.

L&T Technology will be 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.

In July, another Larsen unit, L&T Infotech Ltd floated its IPO. The public issue of the software services unit was covered 11 times but it made a tepid debut on its listing day and have fallen further since then.

L&T Technology had filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI) in July. It received the regulator's approval for the public issue recently

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.

L&T Technology reported Rs 2,894 crore revenue from operations for the financial year ended 31 March 2016, up 13% from Rs 2,560 crore a year before. Net profit rose to Rs 434.2 crore from Rs 315.2 crore.

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

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