Kalyani Steels zooms 20% on winning bid for Kamineni Steel & Power assets

Kalyani Steels was declared as successful bidder for acquisition of assets of Kamineni Steel & Power India Private Limited (In Liquidation) for a cash consideration of Rs 450 crore.

Shares of Kalyani Steels (KSL) hit a new high of Rs 623.75, zooming 20 per cent on the BSE in Thursday’s intra-day trade backed by heavy volumes on acquisition of assets of Kamineni Steel & Power for a cash consideration of Rs 450 crore. In past two trading days, the stock has rallied 24 per cent. Since April, thus far in the financial year2023-24, the stock has appreciated 111 per cent.

In an exchange filing KSL on Wednesday after market hours informed that the company was declared as a successful bidder for acquisition of assets of Kamineni Steel & Power India Private Limited (In Liquidation).

Letter of Intent received from Liquidator appointed by the Hon’ble National Company Law Tribunal, Hyderabad, confirming that the company as a successful bidder, for the sale of assets, KSL said.

The acquisition of assets is to be completed on or before May 7, 2024, while cash consideration of Rs 450 crore to be paid for acquisition of assets on or before April 7, 2024.

At 11:37 AM; KSL was quoting 18 per cent higher at Rs 615.50, as compared to 0.15 per cent gain in the S&P BSE Sensex. The average trading volumes on the counter jumped over 10-fold today. A combined nearly 2 million equity shares representing 4 per cent of total equity of KSL had changed hands on the NSE and BSE so far.

KSL is a part of the Pune (Maharashtra)-based Kalyani group. The company is a leading manufacturer of forging and engineering quality carbon and alloy steel, which caters to the requirement of various segments, viz., automotive, oil & gas, energy, bearings, seamless tubes, railways, etc. The company is a preferred steel supplier for engineering, automotive, seamless tube and primary aluminium industry used in the automobile and engineering industries.

KSL benefits from established selling arrangements with approved vendor status from OEMs and arrangements with suppliers for procurement of raw material albeit absence of long-term contracts.

The domestic demand for alloy steel has improved on the back of strong demand from auto industry, and resultantly, KSL has seen 13 per cent year-on-year (YoY) growth in volumes for rolled products during FY23. The total operating income reached Rs 1,899 crore in FY23 and Rs 998.44 crore in H1FY24. Going ahead, CARE Ratings expects the margins to gradually improve, on the back of continued demand and steady-state raw material prices.

The rating agency have stable outlook on the KSL’s bank facilities, which it said reflects that the rating entity is likely to sustain stable operating performance owing to continued strong demand from group companies and external customers as well. The company is expected to sustain its strong financial risk and liquidity profile amidst healthy cash flow generation from the operations, CARE Ratings said in rationale.