IPO-Bound L&T Tech Sees 15% Revenue Rise This Year; Eyes Buyouts

Mumbai: L&T Group Chairman A M Naik on Tuesday said the company's IPO-bound engineering services arm is targeting 15-per cent increase in revenue to $525 million in the current fiscal and $1 billion over the next three to four years through inorganic growth.

"We were at $460 million last year and will grow to $525 million this year," Naik, who is also the non-executive chairman of L&T Technology Services, said at a roadshow here. 

He said the company wants to double revenue to $1 billion over the next three-four years, and will be looking at acquisitions with revenue of $150-200 million to achieve the target.

Senior company officials said acquisition will be done to gain control over new technologies rather than only for expanding revenue. The company's revenue has grown at a compounded rate of 23 per cent per year over the past three years, they added.

Its pre-tax profit margin moved up to 17 per cent last year, largely on the back of the utilisation ratio increasing to 76 per cent from 71.4 per cent in the year-ago period. 

Attrition stood at 13 per cent. L&T Technology Services' senior officials said 60 per cent of its revenue comes from North America, followed by 20 per cent from Europe (Germany, plus the Nordic region).

They added that the impact of Brexit will be limited as Britain contributed only 2 per cent of its revenue last year.

The company today said it will be hitting the market with its IPO next Monday and raise up to Rs 890 crore at the upper end of the price-band set between Rs 850 and Rs 860. 

Parent L&T will be diluting 10.2 per cent stake through the issue and will have to get its stake down further to 75 per cent in three years.

The company is offering 10.4 million shares of Rs 2 face value as part of the initial public offer. 

This is the second market debut from the engineering giant L&T in as many months and outgoing chairman Naik said there is no new listing on the anvil from the group. 

In a tepid debut last month, L&T Infotech listed 6 per cent below its listing price of Rs 710. It closed up 1 per cent on Tuesday at Rs 652.10 on the BSE against a Sensex rally of over 1.6 per cent.

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