Scribd
Upload
3K views8 pages

L&T Mindtree Project Presentation

L&T is acquiring Mindtree for 107.3 billion rupees, paying 980 rupees per share fully in cash. Post-merger, Mindtree will remain a separate entity. The acquisition will help L&T grow its IT services segment and digital capabilities by complementing Mindtree's strengths in areas like cloud, mobile, and analytics. However, maintaining Mindtree as a separate entity may limit synergies and integration between the two companies due to potential cultural clashes or competition between the businesses.

Uploaded by

Puneet Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
3K views8 pages

L&T Mindtree Project Presentation

L&T is acquiring Mindtree for 107.3 billion rupees, paying 980 rupees per share fully in cash. Post-merger, Mindtree will remain a separate entity. The acquisition will help L&T grow its IT services segment and digital capabilities by complementing Mindtree's strengths in areas like cloud, mobile, and analytics. However, maintaining Mindtree as a separate entity may limit synergies and integration between the two companies due to potential cultural clashes or competition between the businesses.

Uploaded by

Puneet Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • Summary of Acquisition: Provides an overview of the acquisition details including funding, bid amounts, and the post-merger structure.
  • Financial Analysis: Examines L & T’s financial capabilities, cash flows, and return on investment in core businesses.
  • Company Comparison: Compares L & T and Mind Tree across various financial and operational factors, highlighting growth, profitability, and core capabilities.
  • Motives: Outlines the strategic motives behind the acquisition, focusing on growth in IT services and capital efficiency.
  • Mindtree Overview: Presents an overview of Mindtree’s market cap, customer segments, and digital capabilities.
  • Value Addition: Explores the value addition from complementary segments, emphasizing digital capabilities and market synergies.
  • Problems: Identifies potential issues arising from the acquisition, such as competition and cultural mismatches.
  • Revenue Comparison: Compares the financial performance between L&T and Mindtree, focusing on EBITDA margins and revenue growth.

Summary of Aquisition

 Funded by – Fully by L & T


 Total acquisition cost – 66 % at 107.3 Bn Rs
 Price – 980 Rs per share
 Post Merger Structure – Mind Tree to remain a separate entity
 Total bid amount = 10, 700 crore ; L&t cash reserves = 15k-16k crore
L&T Mind Tree Remarks

Growth over a decade 16.5 %, 7306 crore in mar 22 % , 5436 crore at Similar Growth profiles
‘18 mar’18
Profit growth 18.1 % , 1112 crore 18.8 % ,570 crore Similar growth profiles

Margin 17 % in fy 18 13% in fy 18 L& T is higher

Specialization vertical BFSI – 47 % High tech media – 39 % Can complement

ROE – 5 years 40 % 25 % L and T return is higher

Share prices since 2016 Risen by 160 % Risen by 64 % Nifty IT index by 50 %

Digital capability data analytics, cloud, mobile, social, analytics, Complementary skills
infrastructure IoT and cloud journeys
management, and
application development
and maintenance
Costumers Banking and insurance Microsoft ,SAP , AZURE No overlap
Can L &T put the money into better use

• L & t cash flows= 15k-16k crore + 11k ( 2018-2021)


• The RoE in 2003-11 = 24 % ; 2011-2017 = 14 % 2016 = 9% because of investment in core
businesses .
• L&T monetized 9000 crore in IT services in last three years ; IPO in L&T infotech and L&T services .
ROE now is 15 %. Target in 2021 is 18%
• Dividend = 32% of profits
• Failed buyback – stopped by SEBI
• Current investment of cash gives return of 5 %
• Spending 3250 crore to get 20 % stake would not have given desired return nor the control
• Only option left to acquire high return business
Motives
 Grow IT services
 Divest non core businesses
 Unlock capital to stay asset light
 Increase revenue in digital services
 Enhance digital capability
MIND TREE
Market cap – 158.05 bn
Costumers- Microsoft ,SAP ,
AZURE
Strengths-
Digital capabilities
Top tier clients
Value addition
 Complementary segments

 Digital capabilities
 Digital talent pool
 Scale in other segments such as BFSI,CPG,MANUFACTURING AND
HM
 Enhances presences in IMS and cloud
 Geographical synergies
 Access to Clients such as Salesforce, SAP , Azure
Problems
 Two entities- Competition and confusion in minds of clients
 Limit synergies due to separate entity
 Cultural mismatch can limit synergies ( hostile takeover also limit integration )
 Restricting competition among two will limit growth of mind tree
 Exit of promoters can harm relation with clients

LTI
Mindtree

BSE IT
Sector

You might also like