E2E Networks Shares Soar 5% to Record High Following L&T's ₹1,407 Crore Stake Acquisition

E2E Networks, a leading provider of CPU and GPU-based cloud computing platforms, has witnessed a significant surge in its share price, climbing 5% to reach an all-time high of ₹4,977.50 on the NSE on November 5. This rise comes after Larsen & Toubro (L&T) announced its intention to acquire a 21% stake in the cloud services company for approximately ₹1,407 crore. The transaction is expected to be finalized by December 31.

E2E Networks has emerged as a multibagger stock, delivering exceptional returns to investors with its price skyrocketing from ₹493.5 to ₹4,977.5 per share over the past year, equating to an impressive 871% return. The stock has also seen a rally of 341.5% in the last six months and 186% in the past three months. In contrast, L&T's share price is currently facing selling pressure, trading at ₹3,561.90 on the NSE, down 0.35%.

L&T's acquisition plan involves buying a total of 41,71,410 equity shares of E2E Networks. This includes a preferential allotment of 2,979,579 shares, which represents a 15% stake. These shares are priced at ₹3,622.25 each, totaling ₹1,079.27 crore. Additionally, L&T will acquire a 6% stake by purchasing 1,191,831 shares from the founder at ₹2,750 per share, amounting to ₹327.75 crore. Despite this investment, L&T will remain a minority shareholder without acquiring control, retaining certain protective rights.

L&T’s acquisition agreement also provides it with the right to nominate up to two directors to E2E Networks' board, which consists of eight members, including the necessary independent directors. L&T will have the right to nominate these directors as long as it maintains at least 10% of the total shareholding in E2E Networks. This strategic partnership positions L&T to leverage E2E Networks’ capabilities in the rapidly growing sectors of cloud and AI services.

In an exchange filing, L&T elaborated on the rationale for the acquisition, stating, "The acquisition is complementary to the market approach in the fast-growing areas of AI and cloud services. Along with the acquisition, the company also proposes to enter into a software license agreement, reseller agreement and colocation agreement with E2E Networks.”

To Summarize

E2E Networks’ share price has surged to an all-time high following L&T’s announcement to acquire a 21% stake for ₹1,407 crore, enhancing its position in the cloud and AI service market. This strategic move reflects L&T's commitment to expanding its footprint in fast-growing technological sectors. 

E2E Networks operates as an Infrastructure Cloud and AI/ML/GenAI Cloud Platform, providing GPU-as-a-Service solutions tailored for mid-sized enterprises, startups, and research institutions, including prominent IITs and IIITs. With a customer base exceeding 3,000 active clients across ten countries, E2E is recognized as the first Indian company to offer both NVIDIA H100 and H200 GPUs on its public cloud. The company has established strategic partnerships with leading OEMs, including NVIDIA, Intel, AMD, HPE, Microsoft, and Dell.