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Dividend payout, L&T’s open offer makes Mindtree good bet for investors; here’s what brokerage says

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Published: April 19, 2019 12:50:22 PM

Robust dividend payout and open offer by infra major L&T makes Mindtree stock a good bet for the investors in the near term, a brokerage said in a report.

Mindtree board proposes special dividend of Rs 20/share amid L&T takeover bidIn FY19E-FY12E, the brokerage expects the dollar revenue and EPS CAGR of 11 per cent and 13 per cent, respectively.

Robust dividend payout and open offer by infra major L&T makes Mindtree stock a good bet for the investors in the near term, a brokerage said in a report. The strategy to allocate capital and open offer may limit the downside risk in the coming days, Prabhudas Lilladher said in a report. The brokerage has maintained a ‘reduce’ rating with a target price (TP) of Rs 873 from the current market price (CMP) of 972.

In FY19E-FY12E, the brokerage expects the dollar revenue and EPS CAGR of 11 per cent and 13 per cent, respectively.

It was on March 18, the infrastructure major had declared launching an offer offer to purchase an additional 31 per cent stake in Mindress after buying nearly 20 per cent stake of Café Coffee Day founder V.G. Siddhartha.

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In its Q4 results, the mid-size IT services firm had announced a total dividend of Rs 27 (interim dividend Rs 3; final dividend of Rs 4; special dividend of Rs 20). The firm announced the dividends to commemorate the 20-year of the completion of its operations and surpassing the $1 billion revenue milestone in FY19.

However, the firm will now require nod of the shareholders for the dividend payout and this will be processed in the annual general meeting (AGM) scheduled to be held between June and July.

After L&T had bought 21 per cent stake in Mindtree last month and made an open offer for holding a majority stake, the promoters of the IT services firm had called it a hostile takeover bid. The promoters had publicly vowed to fight the infra major’s attempt to take hold of the company.

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