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Amara Raja – Backward Integration By Acquiring Plastic Component Business From Promoter Entity: ICICI Direct


BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

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.

Click on the attachment to read the full report:

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