Amara Raja — Backward Integration By Buying Plastic Component Business From Promoter: ICICI Direct
Demerging plastic component for battery business of Mangal Industries and merging it into Amara Raja Batteries.
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ICICI Direct Report
Amara Raja Batteries Ltd. is a part of the duopolistic organised Indian lead acid battery market with a strong presence across automotive and industrial battery space.
The company announced demerging plastic component for battery business of Mangal Industries Ltd. (unlisted promoter entity) and merging it into Amara Raja (listed entity) for a swap ratio of 65 equity shares of Amara Raja for every 74 equity shares of Mangal Industries.
Total Amara Raja shares to be issued to promoters for acquiring this business is pegged at 1.22 crore shares (acquisition value at current market price ~Rs 592 crore). Post this, promoter holding in Amara Raja will increase from 28.1% to 32.9%.
Demerged entity currently generates ~Rs 570 crore of revenue (FY22) with Ebitda pegged at Rs 98 crore (Ebitda margins at 17%) and profit after tax at Rs 57 crore (profit after tax margins at 10%) with Amara Raja being its sole customer.
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