KPIT Technologies Research Reports By Axis Direct & HDFC Sec

Value unlocking through complex demerger

Board of Directors of KPIT Tech has approved a composite scheme for (a) amalgamation of Birlasoft (India) with KPIT (“proposed merger”); and (b) demerger of engineering business of KPIT into KPIT Engineering Ltd (KEL), and remaining KPIT-Birlasoft (IT Services business).

Value neutral merger despite strong growth of Birlasoft:

Shareholders of Birlasoft will receive 22 equity shares of the combined KPIT-Birlasoft for every 9 equity shares of Birlasoft. Both the demerged (KEL and KPIT-Birlasoft) entities would be listed on the exchange and shareholding would be replicated.

The existing promoters of the company (KPIT – KEL; Birlasoft – KPIT-Birlasoft) propose to acquire sole control and shareholding subject to compliance with SEBI Regulations 2011.”