L&T Technology Services declines 5% on Morgan Stanley’s ‘underweight’ stance

The pure-play engineering services company, a listed subsidiary of Larsen & Toubro Limited (L&T), announced on January 12 an agreement to acquire the parent company’s Smart World & Communication (SWC) business.

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Shares of L&T Technology Services shed over 5 percent in the morning session on January 13 and was the top midcap loser with over 38 percent decline in the last one year.

The pure-play engineering services company, a listed subsidiary of Larsen & Toubro Limited (L&T), announced on January 12 an agreement to acquire the parent company’s Smart World & Communication (SWC) business, which was founded in 2016 to cater to the demands in smart cities, smart utilities, and digital infrastructure. SWC’s business will be acquired for Rs 800 crore, its statement said.

The acquisition will be completed in three months, subject to satisfaction of conditions precedent identified under the agreement. According to LTTS, SWC business generated Rs 1,098 crore in annual revenue for FY 2021-22.

SWC is an intelligence solution provider operating in three segments – communications, safe and smart solutions, and cybersecurity. LTTS said this acquisition will allow it to combine synergies and bring next-gen communications, sustainable spaces, and cybersecurity offerings to the global market.

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Global research firm Morgan Stanley has maintained its ‘underweight’ stance on the stock with target at Rs 3,300 per share. The agreement to acquire the parent company’s Smart World & Communication (SWC) business is one of the largest M&A deals by the company since its inception. Transition of SWC’s domestic business to global clientele profile will weigh on sentiment, the brokerage firm said.

At 9:58am, L&T Technology Services was quoting at Rs 3,441.90, down Rs 198.60, or 5.46 percent on BSE. It has touched an intraday high of Rs 3,625.15 and an intraday low of Rs 3,421.00.

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