After HDFC twin merger, L&T might merge Mindtree and LTI to create a $22 billion IT company, says a new report

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After HDFC twin merger, L&T might merge Mindtree and LTI to create a $22 billion IT company, says a new report
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  • Currently, TCS ranks first among IT firms with the highest market valuation. If the merger comes true the new entity will enter the top five clubs.
  • However, Mindtree refused any development of a merger as of now in a stock exchange filing.
  • Mindtree and L&T Infotech are subsidiaries of Larsen & Toubro in the information technology space.
  • L&T acquired Mindtree in 2019.
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After the merger of HDFC Bank and HDFC, the street might witness another merger of two major companies in the information technology (IT) industry, Mindtree and L&T Infotech (LTI) of Larsen & Toubro.

L&T is considering a merger of its publicly traded IT companies, said a report by The Economic Times.

L&T acquired Mindtree in 2019 by claiming over 60% stake in the Bengaluru based technology services and consulting company.

Mindtree has a market capitalisation of ₹64,165 crore while LTI has a market cap of ₹1.01 lakh crore. Combining both the firms would make an entity worth around ₹1.65 trillion (around $22 billion).
After HDFC twin merger, L&T might merge Mindtree and LTI to create a $22 billion IT company, says a new report
Currently, TCS ranks first among IT firms with the highest market valuation. If the Mindtree-LTI merger takes place, the new entity will join bigwigs like TCS, Infosys, HCL Tech and Wipro.

Tech Mahindra, which is currently the fifth-largest IT company in India, will be out of the top five if the merger goes through.
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CompaniesMarket cap
TCS₹12.88 lakh crore
Infosys ₹6.73 lakh crore
HCL Technologies₹2.98 lakh crore
Wipro₹2.95 lakh crore
Tech Mahindra₹1.30 lakh crore
Source: BSE, market capitalisation as on April 19

$LTI.NSE $MINDTREE.NSE The L&T group is expecting the merger of these 2 subsidiary companies very good. In management opinion, It can bring scale and reduce cost in the merged entity. But the analyst and market is not happy with this development and don't agree with management on this merger. And, this thing is visible in the stock prices. Both stocks have broken their 200 DMA which is not a good sign for the shareholders, at least in the short term. Now, it will be interesting to see whether analyst are right or the L&T management in the long term.

— (@Ayush_choudhari) April 19, 2022

For now, though, Mindtree has refuted the merger reports, in an exchange filing.

“We would like to state that there is no information available with the Company as of today, which is required to be reported under extant SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and which may have a bearing on the stock price of the Company,” said a statement by Mindtree on April 18.

Meanwhile, Mindtree reported strong March quarter earnings at a time when IT giants like Infosys reported poor numbers and high employee attrition rates.

The net profit of Mindtree zoomed nearly 50% on year to ₹473 crore in Jan-Mar. Also, the company is considering a final dividend of ₹27 per equity share for FY22.
After HDFC twin merger, L&T might merge Mindtree and LTI to create a $22 billion IT company, says a new report

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