L&T to acquire 21% stake in E2E Networks for ₹1,407 cr  

Mid-sized IT firm Larsen & Toubro (L&T) announced the acquisition of a 21% stake in E2E Networks Limited, an Indian cloud services provider, for ₹1,407 crore. The transaction is expected to conclude by December 31, 2024, L&T said in an exchange filing on Tuesday.

Delhi-based E2E Networks is an AI-focused hyperscale cloud platform, specialising in providing cloud computing services, particularly utilising central processing unit (CPU) and  graphics processing unit (GPU) resources.

The acquisition will be split into two parts: L&T will initially invest ₹1,079.27 crore to acquire a 15% stake through a preferential allotment. Subsequently, an additional 6% stake will be purchased via secondary acquisition for ₹327.75 crore. Despite its substantial investment, L&T will remain a minority shareholder in E2E Networks, holding protective rights but not full control.

The deal enables L&T to leverage E2E Networks' expertise in artificial intelligence (AI) and cloud solutions, reinforcing its ambitions to lead in the high-demand cloud infrastructure sector.

The news follows an earlier announcement from E2E Networks in August, when the company raised ₹420.51 crore (around $51 million) through an investment round. The funding included contributions from the promoter group and other public investors, aimed at advancing E2E's AI-First Cloud Platform, which supports cutting-edge machine learning and AI-driven applications.

This partnership with L&T is expected to further accelerate E2E Networks' growth, positioning both companies to tap into India’s expanding demand for AI and cloud capabilities.

In July, LTTS released its financial results for the first quarter ending June 30, 2024, reporting a 7% year-on-year (YoY) increase in revenue. The company's revenue reached ₹24,619 million, with a net profit of ₹3,136 million, reflecting a slight YoY growth of 0.8%. The company attributed this growth to its presence in electric vehicles (EV), software-defined vehicles (SDV), and connected car technology.

Meanwhile,  in the US, LTTS's key market, the company saw a 6% YoY revenue increase, totalling $295 million. It reported an EBIT margin of 15.6% for the quarter.

Amit Chadha, CEO & Managing Director of LTTS, while informing about results, highlighted the company’s increasing focus on AI, noting that the company has filed a total of 61 patents in this area.  

By the end of Q1 FY25, LTTS's patent portfolio had expanded to 1,343, with 853 patents co-authored with clients.

The company reported a slight reduction in its workforce, with total headcount at 23,577, down from 23,812 at the end of the previous quarter.