A member of exchange staff uses a fixed-line telephone while looking at financial data on computer screens on the trading floor. (Photographer: Jason Alden/Bloomberg)

KPIT Technologies Trades Without Engineering Division

KPIT Technologies Ltd. listed its information technology business, excluding its engineering division, as part of a three-step complex deal involving a merger and then a demerger with CK Birla Group’s Birlasoft.

The National Company Law Tribunal earlier this month approved the demerger of KPIT’s automotive engineering and mobility solutions business.

As part of the deal, Birlasoft and KPIT promoters last year launched an open offer for KPIT’s minority shareholders. Birlasoft merged with KPIT and the combined entity is split into two units—$475-million enterprise digital IT services company and $272-million automotive engineering and mobility solutions company. KPIT Technologies, excluding the engineering arm, will be named Birlasoft.

The demerger involves allotment of one share in the engineering business for one share held in KPIT Technologies. The record date for identifying shareholders eligible for shares in the engineering unit is Jan. 25. The demerged KPIT Engineering will be renamed KPIT Technologies in February. The management is looking to list the automotive engineering segment in March.

Shares of the KPIT Technologies post-spin out listed at Rs 135 apiece on the National Stocks Exchange.

Analyst’s View

  • Motilal Oswal Securities assigned a forward price-to-earnings multiple of 10 times to the IT business, in line with 10-13 times projected for peers of its size.
  • It assigned one-year forward price-to-earnings multiple of 15 to the engineering segment.

Also read: KPIT Technologies-Birlasoft Deal: Key Things To Know