Engineering and construction giant Larsen & Toubro (L&T) said it will list its IT & Technology business — Larsen & Toubro Infotech Ltd – a wholly owned subsidiary.
“Larsen & Toubro Infotech Ltd is 100 per cent (unlisted) subsidiary of the company. From time to time, the company has been communicating to stakeholders its intention to list its IT & Technology business,” the company said in a BSE filing.
It did not disclose any information regarding the timeline, equity to be sold or valuation.
However, L&T Chairman AM Naik told CNBC in an interview that the company will list its IT services unit L&T Infotech by December by selling 10 per cent stake.
“It looks like we will be coming up in the market in December if not November. We will divest about 10 per cent, we are not raising more funds in the company,” Naik said.
The company did not provide any details of valuation in the listing saying, “The reference to the valuation is the inference of the media. As and when the information becomes credible, we will suitably inform exchanges.”
Naik on being asked by CNBC that would a USD 3 billion valuation seem realistic, said, “I will accept anything which is attractive enough for our shareholders of L&T.”
On financial details of L&T Infotech, Naik said, “Revenue is USD 810 million going upto USD 950 million this year. We had a profit of Rs 762 crore and we hope to be able to achieve Rs 900 crore. Profit is in rupees because now the exchange rate changes everyday. The margin is 20 percent. We are trying to improve operational excellence….”
He said the company is making heavy investments in new technology, digitalisation, sales and marketing and intends to build a strong team before equity sale.
“We need four months to build a strong team. We need to take about 30-40 people i.e. CEO, one level below with about 6-8 people and two levels below with another 30-35 people plus, we need to hire a digitalisation man. We also have to connect the whole of L&T, which will be brought into the digital way of being smart in every business,” he said.
The IT services and solutions provider L&T Infotech, with nine delivery centres, is expanding into new geographies even as it consolidates its client facing organisation in North America and Europe.
Naik also said the company will look at listing other businesses, including its hydrocarbons and transmission and distribution units over the next few years.
L&T Hydrocarbon Engineering, also a wholly owned subsidiary of the company, is dedicated to serving the oil and gas sector globally and delivers turnkey engineering and construction solutions.
L&T is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with over USD 15 billion in revenue.
The shares of the company closed at Rs 1765.05, up 1.96 per cent on the BSE.