LTTS OFS

L&T Technology Services (LTTS) promoter Larsen & Toubro plans to sell its 3.88 percent stake in the LTTS. The LTTS OFS comprises sale of up to 40.34 lakh shares at a floor price of Rs 1,650 a piece—a discount of about 4 percent to preious day closing market price.

About L&T Technology Services OFS(LTTS OFS)

Issue Period04-06 ( Non retail), 6-06-2019(retail)
Selling Share holder Larsen & Toubro Limited (Promoter)
Face Value10
Floor Price1650
MP a Day before1720
% Discount of Floor Price4.24%
Offer Size  (shares)40,34,399
Offer in Rs. Crore666
offer Size Non retail- Shrs36,30,959
offer Size Non retail- Rs.  Cr.599
offer Size Retail- Shrs4,03,440
offer Size Non retail- Rs.  Cr.67

LTTS OFS : Updates

  • Clearing Price of Rs 1654.00 fixed for the Non Retail Bidding in LT Technology Services LTD OFS on day1
  • The clearing price is the m knimum price at whoch retail investors shall be alloted shares in the OFS on T+1 day bidding.

OFS Allocation Methodology

  • Retail investor shall mean an individual investor who places bids for Offer Shares of total value of not more than Rs. 2,00,000/- (Rupees Two Lakhs) aggregated across Stock Exchanges.
  • A Retail Investor may bid at any price above the Floor Price and/or bid at “Cut-Off Price”. “Cut-Off Price” means the lowest price, as shall be determined, at which the Offer Shares are sold in the Non-Retail Category, based on all valid bids received on T Day.
  • Allocation to retail Investors shall be made based on the Cut-Off Price. Upon determining Cut-Off Price for the Retail Investors, the Other Shares reserved for such category shall be allocated to eligible bids of Retail Investors on price priority method at multiple clearing prices / Cut-Off’ price in accordance with SEBI OFS Circulars. In the case of retail potion being oversubscribed, the aggregate number of Offer Shares bid for at a particular clearing price / Cut-Off Price, as the case may be, is more than available quantity then the allocation for such bids will be done on a proportionate basis at such clearing price (at or above the Cut-Offer Price) / the Cut-Off Price, as the case may be.
  • Individual investors shall have the option to bid in the Retail Category and the Non-Retail Category. However, if the cumulative bid value by such an individual investor across both categories exceeds Rs. 2,00,000/- (Rupees Two Lakhs), the bids in the Retail Category will become ineligible. Further, if the cumulative bid value by an individual investor in the Retail Category across the Stock Exchanges exceeds Rs. 2,00,000/- (Rupees Two Lakh only), such bids shall be rejected.
  • Settlement shall take place on a trade for trade basis. For bids received from Non-Retail Category on T Day, non-institutional investors and institutional investors who place orders with 100% of the order value deposited upfront, settlement shall take place on a T+I Day, in with the SEBI OFS Circulars. In the case of institutional investors who place bids without depositing 100% of the order value upfront, settlement shall be as per the existing rules for secondary market transactions (i.e., on T+2 Day). For the bids received on T+l Day, from the Retail Category and from the un-allotted non-Retail Investors who choose to carry forward their bid to T+l Day, the settlement shall take place on T+3 Day. In case of non-institutional investors and institutional investors bidding with 100% margin upfront who chose to carry forward their un-allotted bids to T+1 Day, the settlement shall take place<on_T+2_Day.
  • The allocation to the non-Retail Investors shall be at price equal to the Cut-off Price or higher as per the bids.
About LT TECHNOLOGY SERVICES LTD
  • L&T Technology Services Limited is an India-based engineering research and development services company.
  • The Company is a subsidiary of Larsen & Toubro Limited.
  • The Company is engaged in providing a range of engineering services and related technologies in the areas of embedded systems, mechanical and others. Its segments include Transportation, Process Engineering, Industrial Products, Medical devices and Telecom.
  • The Company also acts as a service provider to companies in India and abroad.
  • It offers services, including embedded system and applications; engineering process services; mechanical engineering; product lifecycle management (PLM), and consulting services.
  • It also offers solutions, including engineering analytics; Internet of Things and machine to machine; power electronics, and semiconductor Internet protocol (IP) solutions.
  • The Company exports engineering and design services to North America, Europe, the Middle East, Japan, Korea and other Asia-Pacific (APAC) countries.
Quarterly Results (figs in Rs. Crore)
ParticularsMar-19Dec-18Sep-18Jun-18Mar-18
Net Sales1343.11316.91266.11152.21054.8
Total Income1376.81352.81321.11250.41130.3
Total Expenditure10951075.21037.3956.1890.8
PBIDT281.8277.6283.8294.3239.5
Interest0.50.60.40.40.8
PBDT281.3277283.4293.9238.7
Net Profit 191.5185.6191197.5158.8
EPS (Unit Curr.)18.4117.8618.5119.2815.52
Equity20.820.820.720.320.5
PBIDTM(%)20.9821.0822.4225.5422.71
PATM(%)14.3314.1315.1517.1915.08
LTTS  Share Price Trend
LTTS price chart
Market Cap in Rs. Cr17,878
Revenue TTM 12 m5,078
Net Profit766
Equity20.80
CMP in Rs.1,719
Face Value2
EPS73.65
Price / Earning (PE)23.34
Book Value238.33
Price / BV0.10
ROCE %37.86%
ROE  %29.58%
Dividend Yield0.92%
Sales 3 yr CAGR12.60%
Debt / Equity Ratio0.03
52 week High/Low1855.00 / 1156.00

Assessment:

  • Purpose of LTTS OFS is to bring down promoter stake to 75% as per SEBI stipulations.
    LTTS ( L&T Technology Services) is one of the leading global pure-play Engineering Research and Development (ER&D) services company.
  • ER&D services are a group of services provided to manufacturing, technology and process engineering companies, to help them develop and build products, processes and infrastructure which they require to deliver products and services to their end customers.
  • L&T Technology Serv. reported Very Positive Financial performance in quarter ended Mar-19.
  • LTTS deal pipeline is strong across verticals, led by transportation and medical devices,
  • LTTS has reduced debt and is virtually debt free.
  • Company has a good return on equity (ROE) track record with 3 Years ROE 33.38%
  • Company has been maintaining a healthy dividend payout of ~ 40%
  • The Last LTTS OFS which was at floor proce of Rs. 1600 failed to be subscribed fully and the share ruled well below the Floor price for almost 1 month after that. However this may not be the case this time.
  • Bidding in OFS opportunities is challenging for retail investors because of the need to may money upfront and change in bid price by large investors at the last moment. Hence chances of allotment many times is difficult.I intend to apply in LTTS OFS with a view to get an allocation but may not bid very aggressively.  If allotted shares in LTTS OFS, I have expectation of moderate returns in short to medium term.
  • With markets at a high & stock not being in F&O, some caution is warranted when bidding for large quantities.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.