L&T Infotech falls 4% after report of Apple ramping down IT outsourcing work
Sharekhan views this development as negative for the stock in the near term
July 04, 2019 / 11:47 AM IST
Larsen & Toubro Infotech shares fell 3.7 percent intraday on July 4 after a media report suggested that Apple ramped down its IT outsourcing work with the company.
The stock was quoting at Rs 1,675.50, down Rs 60.60, or 3.49 percent on the BSE at 1122 hours IST.
"L&T Infotech (LTI) is being questioned by the United States Citizenship and Immigration Services (USCIS) for a documentary discrepancy and procedural lapse related to one of its key customers – Apple. LTI is alleged to have issued letters of invitation to some of its employees to work onsite on the Apple account but Apple is said to have denied any knowledge of such letters being issued," reported The Times of India.
Following this, Apple has ramped down its IT outsourcing work with LTI, the report said quoting sources. Apple's annual contract value with LTI is estimated to be around $25 million.
Sharekhan, which views this development as negative for the stock in the near term, said, "Apple constitutes around 2 percent of the revenues of the company, the event will have some reputation impact on the company in the near term, which we believe would be addressed. On the earnings side, the impact will not be material in the long term."