As Larsen & Toubro (L&T) Infotech Ltd is set to launch its initial public offering (IPO) on July 11, the company is banking on the Brexit advantage to woo investors. According to top company officials, the company has zero exposure to the UK and very limited exposure to the European Union (EU) which makes it almost immune from any negative impact from Britain's exit from the EU. "We have just 2 per cent currency exposure to the GBP, so there's no impact of Brexit on us," Sanjay Jalona, CEO & MD of L&T Infotech said.
The Indian IT industry has been cautious on the Brexit saga as Europe constitutes about 30 per cent of the industry's total export revenue of about $100 billion. Industry body Nasscom has termed the Brexit announcement as a phase of uncertainty in the near term especially because likely decline in the value of the British Pound could render many existing contracts to lose propositions unless they are renegotiated.
The offer for sale of 17.5 lakh shares at a price band of Rs 705-710 opens on July 11 and closes on July 13. The parent company Larsen and Toubro Ltd is selling a 10.3 per cent stake through the IPO. A discount of Rs 10 per equity share will be offered to retail individual bidders on the offer price.
The sixth largest IT services company's IPO is being handled by Citigroup Global Markets India, Kotak Mahindra Capital Company, and ICICI Securities.
L&T Infotech's revenue for FY16 stood at $887 million with 97 per cent of the revenue generated from repeat clients. The company has 258 active clients and banking, financial services and insurance (BFSI) constituted 47 per cent to the total revenue in FY16.
Jalona said that clients are spending less on typical maintenance work and investing more on digital. The company's digital solutions comprising of SMAC, big data, and IoT, constitutes 11.1 per cent to their revenue which grew at a CAGR of 13.5 per cent during 2014-16.
In terms of pricing, L&T Infotech is moving towards a fixed price model which is a positive sign as it indicates greater customer confidence, Jalona added.
BW Reporters
Ayushman is an award-winning business and tech journalist based in Bangalore, with diverse experience in journalism across newspaper, magazine and news wire. He is the recipient of the 15th annual Polestar Award in Jury's category for excellence in journalism in 2013. He is also an NSE-certified capital market professional (NCCMP) and driven by his interest, he has also attended hands-on workshops on cloud computing to stay on top of technology journalism
