Shares of a leading global manufacturer of wire ropes moved up by almost 2 percent in the morning trade session on January 16.
Usha Siam Steel Industries Public Company Ltd (USSIPCL), the subsidiary of Usha Martin in Thailand, has signed an agreement to acquire a 50 percent stake in Tesac Usha Wirerope Company Ltd (TUWCL).
Tesac Usha Wirerope Company is a joint venture between Kobelco Wire Company Limited (50%), USSIPCL (~49.9%) and Usha Martin Singapore Pte Limited, a wholly-owned subsidiary of the Company in Singapore (~0.1%).
The cost of acquisition is Baht 74.45 million and the deal involves the purchase of 12.5 lakh equity shares from Kobelco Wire Company Ltd.
However, the proposed acquisition, to be concluded by January 31st, of TUWCL’s equity shares is not categorised as a related party transaction. The company also mentioned that none of the promoter or promoter group or group companies have any interest in the said acquisition.
The recorded turnover of TUCWCL, which operates in the wire ropes manufacturing industry, was Baht 129.05 million in the December quarter, and the net worth of the company stands at Baht 148.91 million.
Once the acquisition is done, Tesac Usha Wirerope Company, a joint venture of Kobelco Wire Company Ltd, USSIPCL, and Usha Martin Singapore Pte Ltd, will become a subsidiary of USSIPCL and a step-down subsidiary of Usha Martin Ltd.
Incorporated in 2013, TUWCL was merged with Shinko Wire Company Ltd in 2017 which later changed its trade name to Kobelco Wire Company Ltd in 2021.
The share price of Usha Martin went up by 3.17 percent from its previous close of Rs. 308.6. The stock has given over 72 percent of returns in the last one year and nearly 9 percent, so far in 2024.
As of September 2023, ace investor Ajay Upadhyaya holds 35 lakh equity shares, which is equivalent to a 1.17 percent stake in Usha Martin.
The revenue from operations grew 21.57 percent from Rs. 2,688 crores in FY21-22 to Rs. 3,268 crores in FY22-23, accompanied by an increase in profits from Rs. 291 crores in FY21-22 to Rs. 351 crores in FY22-23.
However, the company has delivered a poor sales growth of 9.61 percent over the last five years, while the dividend payout has been low at 14.3 percent of profits in the last three years.
As of the September quarter, FIIs hold 12.03 percent shares in the company and DIIs hold 3.86 percent, aggregating to 15.89 percent of the institutional holding. The promoter holding has decreased by 0.36 percent over the last quarter.
Usha Martin, a leading global manufacturer of wire ropes, was established in 1960 and has a market cap of Rs. 9,677 crores. The company offers a wide range of high-quality wires, speciality wire ropes, low relaxation prestressed concrete steel strands and related services.
Written by Shivani Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
