L&T Technology Services falls 5% as a result of Morgan Stanley's 'underweight' rating
On January 12, the pure-play engineering services firm, a listed subsidiary of Larsen & Toubro Limited (L&T), announced a deal to purchase the parent company's Smart World & Communication (SWC) business.
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L&T Technology Services shares fell more than 5% in the morning session on January 13 and were the top midcap loser, falling more than 38% in the previous year.
Larsen & Toubro Limited (L&T) announced on January 12 an agreement to acquire the parent company's Smart World & Communication (SWC) division, which was created in 2016 to meet the demands in smart cities, smart utilities, and digital infrastructure. According to the statement, SWC's business will be acquired for Rs 800 crore.
The acquisition will be completed in three months, subject to the meeting of the agreement's conditions precedent. According to LTTS, the SWC industry generated Rs 1,098 crore in income for fiscal year 2021-22.
SWC is a provider of intelligence solutions with three divisions: communications, safe and smart solutions, and cybersecurity. This acquisition, according to LTTS, would enable it to combine synergies and introduce next-generation communications, sustainable spaces, and cybersecurity products to the worldwide market.
Morgan Stanley has maintained its 'underweight' rating on the stock, with a target price of Rs 3,300 per share. The agreement to buy the parent company's Smart World & Communication (SWC) business represents one of the company's major M&A transactions since its establishment. According to the brokerage firm, the transition of SWC's local business to a global clientele profile will weigh on sentiment.
L&T Technology Services was trading at Rs 3,441.90 on the BSE at 9:58 a.m., down Rs 198.60, or 5.46 percent. It reached an intraday high of Rs 3,625.15 and a low of Rs 3,421.00.
