L&T boosts AI, data center ambitions with E2E Networks deal

As part of the deal, L&T will integrate E2E Networks’ cloud and AI cloud platform with its data center management and cloud solutions business.

L&T is developing its own data centers and in recent weeks has operated a 2MW facility and a 12MW facility in Panvel near Mumbai and in Chennai. While the data center allows the company to provide computing power to its customers, the partnership with E2E allows it to offer an enterprise cloud layer on top of it.

In layman’s terms, this means that L&T is building the equivalent of a computer processor, while E2E Networks brings the spreadsheet software necessary to harness the computing power. By bringing these two services together, companies and business groups can optimize operating costs. It also expands the scope of customers that L&T can attract, especially in the field of artificial intelligence.

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“They essentially have their own cloud. We are talking about 18 to 30 months to set up a project like this,” said Hasit Joshipura, advisor, chairman and managing director, L&T Data Center, Cloud Services and Innovation Fund.

“I think it’s not a question of whether L&T can do it. The point is, if you see a technology that perfectly fits your strategy, then why wouldn’t you invest in it?” Joshipura said. Mint. “This is a field that’s growing very rapidly.”

“The move is in line with the expected scope of acquisitions and investments by large conglomerates. Building core AI capabilities from scratch and It will not necessarily benefit L&T as opposed to leveraging customer relationships through partnerships with investee companies.”

Another Indian AI business consultant, who also requested anonymity due to non-compete clauses with E2E rivals, further said: “Investing in AI cloud companies is an ongoing trend among global companies, not just in India. L&T may take advantage of Its investment in E2E Networks joins India’s other large industrial groups – Tata Group and Reliance Industries already have an advantage in this regard.”

symbiotic partnership

The collaboration may also help E2E. Currently, its servers are located at Netmagic data centers in Noida and Mumbai. In the future, as the company grows, it can leverage L&T’s data centers.

“They have the software, but it has to be in someone’s data center,” Joshipura said.

E2E’s services are particularly targeted at higher education and research institutions, enterprises, and AI/ML (machine learning) startups that do not have the financial resources and technical bandwidth to develop their own cloud computing solutions.

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“Partnering with E2E Networks enables us to provide customers with a seamless, scalable and secure cloud experience. By combining our capabilities, we are delivering a cloud ecosystem to Indian enterprises looking to drive growth, optimize costs and free up labor The full potential of intelligence and digital transformation,” said Seema Ambastha, CEO, Data Center and Cloud Business, L&T. In a joint press statement from the two companies.

L&T will invest $Acquired 21% stake in E2E Networks for Rs 1,407 crore. This includes acquiring 15% of the shares through a preferential allotment $3,622.25 yuan per share and a second acquisition of 6% equity $2,750 per share.

E2E is valued at a price-to-earnings (P/E) ratio of 185.5 times based on key components of L&T investments Mintcalculation. In comparison, the average P/E ratio of India’s top 10 IT companies is in the range of 50-60.

Valuation rises

Commenting on the high valuation, Joshipura said: “If you want new technology, the valuation is high. Nvidia has become one of the most valuable companies in the world. Is it that rich?”

E2E Networks shares rose 5% to close at $The price listed on the National Stock Exchange on Wednesday was 4,997.50. Since the beginning of the year, these stocks have returned shareholders more than 7 times.

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L&T shares closed down 0.2% $3,566. The benchmark Nifty closed 0.9% higher.

“The strategic partnership between E2E Networks and L&T marks a major milestone in the future adoption of the domestic HyperScaler cloud platform in India. This partnership marks the next step in the ‘Make in India’ journey to run production-grade legacy CPU workloads in India and GPU-led GenAI (generative AI) innovation. India’s image has shifted from being seen as a digital colony to being a provider of sovereign cloud platforms to the world,” said Tarun Dua, Chairman and Managing Director, E2E Networks. Tarun Dua said in a statement.