Larsen & Toubro (L&T) is acquiring 21% stake of E2E Networks.
- E2E is a listed Company
- It was founded in 2009 and got listed in 2018
- The Company mainly offers public cloud to it’s customers
- 21% stake acquisition by L&T is a combination of primary and secondary
- 15% primary through preferential allotment @ 3,622/ share totalling Rs 1079 cr
- 6% secondary stake acquisition from existing promoters @ 2,750/ share totalling Rs 328 cr
- During TTM, E2E reported revenues of Rs 142 cr and PAT of Rs 31 cr
- In last 3 years, revenues have grown at a CAGR of 39% and PAT at 153%
- Cash flows have corresponded well indicating a genuine ramp up in operations in recent years
Optically it does seem quite a rich valuation that L&T has paid. In May 2024, E2E was market valued at around Rs 1,700 cr as against Rs 6,700 cr of valuation paid by L&T. Insiders have already pumped up E2E valuation to Rs 8,800 cr currently.
As per the announcement –
“E2E Networks specializes in providing CPU and GPU-based cloud computing platforms, to help its customers carry out large scale general and AI-workloads by leveraging its relationship with NVIDIA.”
It does seem like a AI/ Nvidia influenced investment decision by L&T. Also surprisingly, the investment has been made by L&T and not L&T Technology Services.