LTIMindtree to see growth in BFSI and retail verticals, say analysts

BENGALURU: The proposed L&T Infotech (LTI) and Mindtree amalgamation will help LTIMindtree to strengthen collaboration opportunities and create the country’s next large-scale IT services player.

LTIMindtree will have a diversified service offerings portfolio across different verticals.

Along with revenues ($3,513 million), the combined entity’s employee headcounts will also increase. LTI has over 46,000 manpower and there are more than 35,000 employees in Mindtree.

Though analysts point out the benefits, they also say it’s too early to talk about the benefits at the cost level.

Last week, Larsen & Toubro (L&T) announced the merger between its IT services business units- LTI and Mindtree.

According to brokerage firm Anand Rathi, the combined entity offers high growth potential in BFSI, hi-tech and retail, a diversified base and better margin defence.

For the combined entity, BFSI will be the largest vertical, with 35% revenue exposure, followed by retail CPG manufacturing at 26%, and by CMT/h-tech at 25%, together 86% of revenues, it said.

It says revenues to touch $5 billion by FY24 and margins to hold at 20% after M&A-related costs and potential employee-retention-related expenses.

Though a few analysts have said that both firms have complementary capabilities and client exposures, Peter Bendor- Samuel, CEO of Everest Group, a research firm told TNIE that it is a risky decision, as they could lose market momentum.