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