Motilal Oswal
    NIFTY 50
Motilal Oswal
Information Technology

What does Mindtree acquisition mean for L&T shareholders?

Updated : March 18, 2019 02:30 PM IST

The battle for Mindtree is heating up as reports, citing sources, claimed that L&T board is likely to announce a "hostile takeover" on Monday, even as Mindtree promoters look to thwart the plan by considering a buyback.

What does this mean for the L&T shareholders?

  • The L&T shareholders who had bought the shares with an anticipation of a buyback or a special dividend would be disappointed with the development as the company would have to spend a sizeable chunk for the Mindtree acquisition.

  • Secondly, the other income would also get impacted because the company would have to use the cash.

  • The RoE of the company would also go down. The company had targeted to move it to 18 percent, however, now it would take it much longer to reach that level.

  • Meanwhile, the valuation multiples would also fall over medium to long term, which is a tad bit negative for L&T shareholders.
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