L&T Technology Services Limited (LTTS) is tapping the capital market with its offer for sale of 104 lakh shares of Rs 2 each in a price band of Rs 850-860. The issue has opened on Monday the 12th of September and closes today the 15th of September. The company had earlier allotted 31.20 lakh shares to 19 anchor investors comprising of 33 entities.

The company is into the ERD space and was formed from an existing division of L&T Info the company which listed in July 2016. To this some acquisitions were added and the new entity LTTS was formed. The shares being offered in a price band of Rs 850-860 are steeply priced on a fully diluted consolidated basis based on March 2016 results at 26.5 times to 26.8 times. Even though this is a standalone ERD company unlike many others for whom it is a vertical or business unit, there is nothing left on the table for investors.

Added to this is the baggage of the fact that both the previous divestments from L&T did not yield results and profits from investments for investors. While L&T Finance took more than a couple of years to do so, L&T Infotech has yet to yield returns even though two months have almost passed since listing. The share is actually trading with losses of about 10% at Rs 640 against an issue price of Rs 710.

As of yesterday evening which was the 2nd day of subscription, the issue was subscribed 0.71 times with the QIB portion subscribed 1.10 times, HNI 0.03 and retail 0.77 times. A total of 1.25 lakh applications were received which is a far cry from 10.90 lac applications received in the issue of L&T infotech. I am not sure whether any more divestments from the L&T stable will happen or not but this is a wakeup call for the company and its professional management.

The odds are against the investor making money in this issue. That is why the heading third time lucky or hat trick of failures. Take your call.