Mumbai: The initial public offering (IPO) of L&T Technology Services Ltd, excluding the anchor allotment, drew 70.57% demand for its shares as on Wednesday led by institutional investors. The three-day public issue will close on 15 September.

Larsen & Toubro Ltd, the parent firm, is looking to raise 890 crore.

As of 5:15pm on Wednesday, the IPO received applications for nearly 5.14 million shares, showed stock exchange data. The company has offered to sell 7.28 million shares.

The institutional investor category was subscribed 109.99% or 1.09 times, while the non-institutional category comprising high net-worth individuals was subscribed 3.16% or 0.031 times.

Retail individual investors, whose investments cannot exceed 2 lakh in an IPO, book drew 77% demand against 3.64 million shares on offer, data showed.

Domestic and foreign brokerages have recommended investors to subscribe to the IPO with a long-term view, citing the company’s diversified business, strong promoter backing and market growth opportunities.

“We like L&T Technology Services as a long term story. At the price band, L&T Technology offer comes at a price-to-earning (P/E) of 20.7x-20.9x its FY16 EPS, which is at ~20% discount to peers group average (~25x). We believe the promoters have rightly priced the IPO which would have been as even a higher valuation would be alright given the premium it can demand due to the reputation of the parentage," said Mayank Babla, analyst, KR Choksey Shares & Securities Pvt. Ltd.

On Friday, L&T Technology Services raised 268.32 crore by allotting shares to anchor investors. The firm sold 3.12 million shares to 15 anchor investors at 860 apiece, the upper band of the 850-860 price band for the issue.

Institutions that participated in the anchor book include Sundaram Mutual Fund, DSP Blackrock Mutual Fund, FIL Investments (Mauritius) Ltd, Blackrock India Equities (Mauritius) Ltd, JP Morgan Funds, Oaktree Emerging Markets Mauritius Holdings Ltd, and Vanguard Emerging Markets Select Stock Fund

The anchor book is that portion of an IPO which bankers allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the IPO launch and is an indicator of institutional investor interest.

Larsen and Toubro, India’s largest engineering and construction company, is selling up to 10.2% of its stake in its engineering, technology research and development company, giving a valuation of around 8,800 crore.

This is the second IPO from the L&T stable this year.

In July, its IT unit L&T Infotech Ltd saw its 1,243-crore IPO subscribed 11.69 times. The issue was priced at the upper end of the price band of 705-710 per share.

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