Kesoram Industries was locked in 20% upper circuit at Rs 137.30 at 11:11 IST on BSE on reports that tyre major MRF is in advanced talks to buy the company's tyre unit in Uttrakhand.
Meanwhile, the S&P BSE Sensex was up 167.33 points or 0.59% at 28,429.34.
On BSE, so far 9.81 lakh shares were traded in the counter with pending buy orders of 88,236 shares at upper circuit. The stock has an average volume of 1.24 lakh shares in the past one quarter.
The stock hit a high of Rs 137.30 and a low of Rs 130 so far during the day. The stock hit a 52-week low of Rs 59.40 on 17 February 2014. The stock hit a 52-week high of Rs 154.90 on 16 September 2014.
The stock had outperformed the market over the past one month till 19 January 2015, rising 14.97% compared with 3.25% rise in the Sensex. The scrip had, however, underperformed the market in past one quarter, sliding 6.76% as against Sensex's 8.25% rise.
The small-cap company has an equity capital of Rs 109.78 crore. Face value per share is Rs 10.
Tyre major MRF is reportedly in advance discussion with BK Birla flagship Kesoram Industries to acquire its main tyre unit out of the two of Birla Tyres for a value that's far higher than the market capitalisation of the entire company.
Reports indicated that the deal, once completed will be the MRF's first ever acquisition and consolidate its manufacturing presence in the north Indian market. It will also help to get a stronger grip over the commercial vehicles tyre segment where it is the second largest player after Apollo Tyres, reports added. For Kesoram Industries, selling its principal unit in Laksar, Uttrakhand would help the company deleverage its balance sheet significantly which is burdened by a ballooning debt pile and free up working capital for other operations, reports indicated. The tyre business contributed almost half of its year ended 31 March 2014 EBITDA (earnings before interest, taxes, depreciation, and amortization).
As per reports, Birlas are expecting a minimum enterprise valuation of Rs 2200 crore for Uttarakhand facility alone, which is steeply higher than the market capitalization of Rs 1507.15 crore of the entire company yesterday, 19 January 2015. MRF has reportedly offered Rs 1600-Rs 1800 crore for the Uttarakhand facility.
Birla Tyres is among the top five tyre markers in the country. Currently the company has two production facilities in Balasore, Orissa and Laksar, Uttrakhand with a total capacity of 12.1 million tyres per annum of which only half was utilized in FY14, reports indicated.
Kesoram Industries reported a net loss of Rs 250.63 crore in Q2 September 2014, higher than net loss of Rs 128.77 crore in Q2 September 2013. Total income declined 3.1% at Rs 1208.66 crore in Q2 September 2014 over Q2 September 2013.
Kesoram Industries is a diversified company. The company manufactures tyres, cement, rayon yarn and transparent paper.
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