Are L&T Infotech and Mindtree mulling a merger?

Construction giant Larsen & Toubro's (L&T) two portfolio software companies, L&T Infotech and Mindtree, may mull a merger as soon as next week, a report by Bloomberg stated. However, the two IT service companies have offered no comments on the reported development. L&T had acquired 61 per cent stake in Mindtree in 2019 for over Rs 10,000 crore.  L&T also owns 74 per cent stake in L&TI. The combined market capitalisation of both the tech firms is nearly Rs 1.66 lakh crore.

The proposed deal could be a share-swap transaction, although it mentions that the merger could even fall part or suffer delay, quoting one of its sources, Bloomberg's report stated, quoting its sources.

Mindtree will announce its Q4, FY22 results on Monday whereas L&TI will report its Q4 earnings on Tuesday.

Mindtree reported a 34 per cent year-on-year (YoY) increase in net profit to Rs 437 crore in Q3 FY22 whereas its revenue grew 36 per cent YoY to Rs 2,750 crore for the quarter.

L&TI reported its strongest quarterly growth in Q3 FY22 with revenue jumping by 31 per cent YoY to Rs 4,137 crore and net profit seeing an 18 per cent YoY growth to Rs 612 crore.

IT services sector has been leveraging the digital transformation drive set off by the pandemic, as enterprises look to modernise their infrastructure and tech capabilities, leading to the demand in digital and engineering services.