Incorporated in 2012, L&T Technology Services (LTS) is a leading global pure-play in the growing ER&D services company. The company leverages the strengths and heritage of Larsen & Toubro, a leading Indian conglomerate with strong global engineering capabilities providing it deep domain expertise in product and process engineering. LTS operates in five diverse industry segments viz. transportation, industrial products, telecom and hi-tech, process industry and medical devices. In FY16, the company derived ~50% of revenues from the three segments of industrial products, process industry and medical devices. The company aims to raise ~| 894 crore through an offer for sale of shares (at a price band of | 850-860 per share).

Valuation : LTS is one of the leading players in the growing ER&D space. However, the stock is available at 15.5x FY18E EPS, which is at a premium to other IT players who has presence in ER&D space such as HCL Tech (12.3x FY18E EPS) and Cyient Technologies (11.9x FY18E EPS). Hence, we believe current valuations leaves limited upside. We recommend that investors AVOID the issue.