Sharekhan's research report on Larsen and Toubro Infotech
L&T Infotech (LTI’s) board announced the merger of Mindtree with itself at a swap ratio of 73 shares of LTI for every 100 shares of Mindtree. The proposed valuation of the merger remains fair to shareholders of both firms. Proposed merger to benefit combined entity in terms of large deal bids, building a huge talent pool, strengthening relationships with partner ecosystems and providing end-to-end service offerings to clients. With the exit of Mr. Sanjay Jalona (MD & CEO of LTI), we believe there could be some attrition in the leadership team in the near term. Further, difference in work culture could have an adverse impact on integration of workforce of both entities.
We maintain a Buy on LTI with a revised PT of Rs. 6,000 given synergy benefits from the impending merger, minimal overlap of clients and strong growth prospects.
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