Huge runway awaits for LTIMindtree post-merger

LTIMindtree, the result of the recent marriage of two IT services companies, LTI Infotech and Mindtree, is set to play on the front foot as the merged synergies will allow the entity to tap larger markets, cross-sell - up-sell, and even eye for larger deals. 

Erstwhile, Larsen & Toubro Infotech (LTI) and Mindtree officially merged to establish LTIMindtree on November 14. The merged entity got relisted on Indian exchanges and commenced trading on December 5. On the opening day, the shares closed 1.84 per cent lower at ₹4,974.50 on the BSE. 

Analysts opine the synergies will result in both entities benefiting from each other’s expertise in specific sectors. Omkar Tanksale, Research Analyst, Axis Securities, told businessline, “They are coming together to multiply the synergies they have. LTI has specialization towards BFSI and high-tech verticals, whereas Mindtree is strong in retail, CPG, and other verticals. This combination will provide access to an overall broad-based portfolio.” 

The penetration towards the existing portfolio of clients will have more impact, resulting in getting more business and helping tap a larger client base, he added. LTIMindtree could also function with an agile model focused on specific sectors that Mindtree had been following instead of the water flow model followed by LTI and most other top IT services companies, he further opined. 

Debashis Chatterjee, CEO of LTIMindtree, on the first day of the merger, had told businessline, that the merger will enable the entity with opportunities to cross-sell and upsell across industries. “With the combined strength, we can enhance the work with clients we have not concentrated on in areas that were not our strong suits. This will increase our wallet share within specific clients,” he had said.

He also noted that the company will also be able to get and participate in larger deals, given the increase in the size of the company. Additionally, LTIMindtree will also be able to have strong partnership status with all the hyper scalers.

The results and the impact of synergies are said to be seen in a couple of quarters, if not immediately. However, a merger of this scale and nature would bring along some complexities as well. Tanksale opines an increase in attrition levels in the coming quarters and a probability of senior-level (vertical heads) exits is to be watched out for in case the integration isn’t executed well as the company embarks on a new journey. 

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