Key Points of L&T hit hard due to IT crisis at LTIMindtree & L&T Tech:
- L&T shares plunged on April 17 due to heavy selling in IT sector companies owned by the firm following Infosys’ poor Q4 results.
- The Nifty IT index dropped over 6 percent, with Tata Consultancy Services (TCS) and Infosys posting weak earnings for the March quarter.
- Infosys witnessed its steepest fall in three years, declining by 11 percent, and hitting a low of over one year, wiping out investors’ wealth worth Rs 70,000 crore.
- Several brokerages downgraded Infosys stock after it stated that sales growth would only be 4 to 7 percent in the current financial year, citing lower client spending and an uncertain demand environment due to the failure of US banks.
- The sell-off affected other companies, with Wipro and TCS losing 3 percent each, while LTIMindtree fell 8 percent, and Persistent Systems, Coforge, Tech Mahindra, Mphasis, and HCL Technologies also declined up to 6 percent.
- L&T holds a majority stake in LTIMindtree and L&T Tech Services, both of which fell 8 percent, affecting the benchmark Sensex and the Nifty, which both sank by 1.2 percent.
- The decline in the IT sector is a significant blow to the Indian economy, given its contribution to the country’s GDP, and highlights the need for companies to build resilient systems and capabilities to withstand future uncertainties.
Details of L&T hit hard due to IT crisis at LTIMindtree & L&T Tech:
Shares of Larsen & Toubro (L&T) fell on April 17, as IT sector companies owned by the firm experienced heavy selling following poor Q4 results by Infosys, India’s second-largest IT services company. The Nifty IT index dropped over 6 percent, with Tata Consultancy Services (TCS) and Infosys posting weak earnings for the March quarter. Infosys witnessed its steepest fall in three years, declining by 11 percent and hitting a low of over one year, wiping out investors’ wealth worth Rs 70,000 crore.
Several brokerages have downgraded Infosys stock after it stated that sales growth would only be 4 to 7 percent in the current financial year, citing lower client spending and an uncertain demand environment due to the failure of US banks. This led to a domino effect, with Wipro and TCS losing 3 percent each, while LTIMindtree fell 8 percent. Persistent Systems, Coforge, Tech Mahindra, Mphasis, and HCL Technologies also declined up to 6 percent.
L&T holds 68.7 percent in LTIMindtree and 73.85 percent in L&T Tech Services. Both stocks fell 8 percent. The sell-off affected the benchmark Sensex and the Nifty, which both sank by 1.2 percent. As of 11.20 am, the Sensex was down 728 points at 59,702 points, and the Nifty was down 182 points at 17,645.
The decline in the IT sector is a significant blow to the Indian economy, given the sector’s contribution to the country’s GDP. While experts predict a rebound in the IT sector post-pandemic, the current state of the sector remains uncertain. The IT sector’s decline is also a wake-up call for companies to focus on building resilient systems and capabilities to withstand future uncertainties.
About L&T:
L&T is a Mumbai-based Indian multinational conglomerate, operating in engineering, construction, manufacturing, technology, information technology, and financial services. It ranks among the top five construction companies globally.
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