Shares of a leading Tier-1 automotive systems and components supplier surged 9.07 percent on BSE to Rs. 567.95 on Monday, after the company announced entering into the green and alternate fuels segment through a strategic agreement to acquire a majority stake in Greenfuel Energy Solutions.
At 11:33 a.m., the shares of Lumax Auto Technologies Limited were trading in the green at Rs. 556.3, up by 6.8 percent, compared to its previous closing price of Rs. 520.7, with a market capitalisation of Rs. 3,791.6 crores.
What’s the news:
As per 14th July regulatory filings with the stock exchanges, Lumax Auto Technologies Limited (LATL) signed an agreement to acquire a 60 percent stake in Greenfuel Energy Solutions Private Limited from its existing shareholders.
The proposed acquisition will be LATL’s entry into the green and alternate fuels sector, including CNG, hydrogen, and other applications, which is expected to experience significant growth in the near future.
The proposed partnership with Greenfuel offers LATL the opportunity to expand and diversify its solutions for automotive OEMs in India.
LATL and Greenfuel’s management teams will collaborate as strategic partners, combining their competitive strengths to unlock future business potential and aim to position Greenfuel as an industry leader in the alternate fuels segment.
The acquisition is expected to be accretive to LATL’s earnings per share (EPS) and return on capital employed (RoCE).
By 30th November, contingent upon meeting the customary conditions precedent as specified in the Share Purchase Agreement, while the total cost for acquiring a 100 percent stake in Greenfuel is set at Rs. 221 crores.
About the target entity:
Greenfuel is a leading supplier of (1) high-pressure fuel delivery and storage systems, including related components and sub-systems, primarily for CNG and hydrogen vehicles, and (2) fire and smoke alarm, detection, and suppression systems, including related components and sub-systems, for the automotive industry.
It is a supplier to key OEMs including Maruti Suzuki, TATA Motors and Volvo Eicher Commercial Vehicles among others.
Greenfuel has established strong technology collaborations that provide a competitive advantage in delivering industry-leading solutions to its clients.
Over the past three financial years, the company’s turnover was Rs. 159 crores in FY22, Rs. 151 crores in FY23, and Rs. 214 crores in FY24.
It is important to note that Greenfuel’s other ancillary businesses will be excluded from the scope of the proposed acquisition.
It is important to note that Greenfuel currently also has other ancillary businesses which will be excluded from the scope of the proposed acquisition.
Financials:
The company experienced significant growth in its revenue from operations, showing a year-on-year rise of around 20 percent from Rs. 632 crores in Q1 FY24 to Rs. 756 crores in Q1 FY25.
Similarly, its net profit increased during the same period from Rs. 30 crores to Rs. 42 crores, indicating a rise of nearly 40 percent YoY.
Lumax Auto’s share in the 4-wheeler segment of the Advance Plastics category has grown from 23 percent in FY22 to 69 percent in FY24. Similarly, its share in the Structures & Control Systems segment for 4-wheelers has risen from 46 percent in FY22 to 60 percent in FY24.
Stock Performance:
The stock has delivered positive returns of nearly 52.4 percent of returns in one year, as well as around 20 percent returns in the last six months. So far in 2024, the shares of Lumax Auto have given positive returns of about 42.7 percent.
About the company:
Incorporated in 1981, Lumax Auto Technologies Limited, a part of the D.K. Jain Group of companies, is primarily engaged in the business of manufacturing and supplying of automotive lamps, plastic moulded parts, and frame chassis to two, three, and four-wheeler segments.
Written by Shivani Singh
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