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Minda Corp - Acquisition Of A 15.7% Stake In Pricol, Purely A Financial Investment: Axis Securities

It currently only has a minority stake in Pricol and hence no synergies are expected from the acquisition

<div class="paragraphs"><p>Pricol. (Source: Company website)</p></div>
Pricol. (Source: Company website)

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Axis Securities Report

On Feb 17, 2023, Minda Corporation Ltd. acquired 19 million equity shares of Pricol Ltd., representing 15.7% of its total issued and paid-up equity share capital.

Rationale of the Acquisition:

The management stated that this is purely a financial investment without providing Minda Corp any special rights in Pricol other than the rights as a shareholder of Pricol. This is an open-market transaction at an average price of Rs 208/share aggregating to Rs 400 crore. After evaluating various opportunities and as per the mandate of the board, the company deployed its surplus investable cash for this acquisition.

Debt/Equity: Post this open market transaction, Minda’s D/E ratio is 0.3 and debt/Ebitda of 1:1. It has long-term debt of Rs 150 crore and net short-term debt of Rs 260 crore. The company reiterated that it has a strong balance sheet with enough cash flow generation capacity to support organic growth and meet its capex requirement. Moreover, the company continues to be on the lookout for any further inorganic growth opportunities. 

Future Synergies: Minda Corp informed that the decision to invest currently is a financial investment. It currently only has a minority stake in Pricol and hence no synergies are expected from the acquisition

Click on the attachment to read the full report:

Axis Securities Minda Corporation Company Update.pdf

More Research Reports On Minda Corp's Stake In Pricol

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