Astra Microwave Products Ltd. board on Friday gave an in-principal to demerge the Space, Meteorology and Hydrology business undertakings into a separate entity. The company said the move will enable a focused management attention and operational efficiency by creating an independent company exclusively dedicated to these emerging business, besides unlocking value for shareholders.
The demerger will also lead to adoption of tailored growth strategies and capital allocation suited to the space, meteorology and hydrology sector, the statement said. The board has authorised the management to consult with subject experts on this matter, for the consideration by the Audit Committee and the Board.
"The Audit Committee shall appoint a Registered Valuer for determining the share exchange ratio for the proposed demerger, to finalise the structure of the proposed demerger, including identification of assets, liabilities, contracts, employees and other matters forming part of the Space, Meteorology and Hydrology business undertakings; and to do all such acts, deeds, matters and things as may be necessary, proper or expedient for the purpose of giving effect to this resolution," the statement said.
Astra Microwave clarified that a final decision on the proposed demerger, including its structure, share exchange ratio, and other terms, shall be taken by the board after receipt of requisite reports and opinions.
Shares traded flat at Rs 995 apiece, compared to the benchmark Nifty 50 that was down 0.8%. The total traded volume so far in the day stood at 2.2 times its 30-day average. The relative strength index was at 65. The multibagger defence stock has risen risen 61% in the last 12 months and 800% over the last five years.
All seven analysts tracking the company have a 'buy' rating on the stock, according to Bloomberg data. The average of 12-month analyst price targets is Rs 1,125, which implies a potential upside of 15%.
ALSO READ: Not Just HAL Or BEL: These IT-Linked Firms Are Quietly Powering Indias Defence Push
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.