LTI-Mindtree unlikely to make it to Nifty50 in March 2023 review

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26 Aug, 2025 12:21

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The merger of L&T Infotech (LTI) with Mindtree has made it the country's fifth-largest IT provider by market capitalisation and sixth-largest by revenue. The combined, however, is unlikely to make it to Nifty 50 in March 2023 review, contrary to market chatter.

“Until the merger is completed and fresh shares are credited to the shareholders, the index provider (NSE) will consider LTI as an independent entity,” Abhilash Pagaria of Nuvama Alternative & Quantitative Research said.

As per the merger agreement, the share swap deal has been fixed at a ratio of 73 shares of LTI for every 100 shares of Mindtree. The record date to identify eligible shareholders is November 24, 2022.

As Mindtree (target company) shareholders will get LTI (acquirer) shares only after the record date, Nuvama believes the combined market cap would not qualify for the calculation period of August 2022 to January 2023.

“The elementary deduction is that LTI’s average market cap will be considered with 26 percent free float. Once fresh shares are credited, the free float considered will be 31/32 percent (as indicated by management). Contrary to our stance, the Street is assuming the market cap of both the entities for the market cap review period,” Pagaria said in his note.

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For a stock to qualify the free-float market capitalisation, it should be at least 1.5 times the free-float market capitalisation of the smallest constituent in Nifty 50. Currently, BPCL has the lowest free-float market cap at Rs 29,364 crore. LTI’s free float market cap is Rs 23,502 crore.

Also read: 'How did we capture your heart?' LTI, Mindtree engage in social media banter post merger

According to the National Stock Exchange website, index reviews are carried out every six months to ensure that each security fulfils all the laid down criteria. Nifty50 uses researched and publicly documented rules for index revision.

Both stocks were trading flat in the morning. Mindtree was quoting at Rs 3,736.25 on the National Stock Exchange, down 0.81 percent. LTI was up 0.38 percent at Rs 5,175 on the NSE.

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