(Repeats story issued late on Wednesday) (Adds details, quotes, analyst comment, background)
By Janaki Krishnan
MUMBAI, June 21 (Reuters) - TechLtd., a venture between India's Mahindra & Mahindra Ltd. (M&M) and UK's BT Group Plc. , said on Wednesday it plans to sell 12.74 million shares through an initial public offering.
The issue would trim BT Group's stake in Techto 33.95 percent from 38.56 percent, and bring down M&M's stake to 45.01 percent from 51.12 percent, the firm's chief executive Vineet Nayyar said.
The issue, for which the draft prospectus was filed on Wednesday with the Indian stock market regulator, would lead to an equity dilution of 11 percent.
The company's bid to enter the market comes at a time when new issuances are taking a beating and the benchmark stock index has dipped nearly 21 percent from an all-time high of 12,671.11 points scaled in May 2006.
"We are on a sound footing now and our financials are looking good," said Nayyar. "We have the right characteristics which we feel an investor wants while investing in a company like ours."
He however did not give any time frame for the issue.
"Recent IPOs and the response to them have shown that people are choosy where they put their money," said Rajeev Ramchandani, IT analyst with Religare Securities. "When big established names have not been able to get support, it would be difficult for a new company in this market."
"Though the company seems good going by its figures, its valuations will take a hit because of its high dependence on BT," said Vishal Agarwal, analyst with ASK Raymond James.
Around 69 percent of the company's revenues in 2005/06 came from BT, compared to 82 percent just over two years ago. Net profit in 2005/06 was 2.35 billion rupees, up from 1.02 billion the previous year, while its fully diluted earnings per share stood at 22 rupees.
Tech Mahindra will invest 3.5 billion rupees over 18 months on a 10,000-seater capacity Pune campus, a 5,000-seat facility in Kolkata and a development centre in Chandigarh.
During the current fiscal, the company plans to add 5,000 employees to its existing base of 9,513.