20% Upper Circuit: Small Cap Stock Skyrockets On Winning Bid For Acquisition Of Kamineni Steel Assets

The share price of small-cap stock Kalyani Steels Ltd touched the upper circuit of 20% in early morning trade on Thursday (Jan 11) after the company informed that it was declared as the successful bidder for the acquisition of assets of Kamineni Steel & Power India Private Ltd. Today, Kalyani Steels shares closed 14.93% higher at Rs 597.40 per share. At this price, the company has a market capitalization of Rs 2,607.83 crore.

In an exchange filing on Wednesday, the company said, "The Company has been declared as Successful Bidder for Acquisition of Assets of Kamineni Steel & Power India Private Limited (In Liquidation), pursuant to the invitation for Sale of Assets through e-auction platform, under Insolvency and Bankruptcy Code, 2016."

The acquisition involves a Cash consideration of Rs.450 Crore to be paid for the acquisition of assets on or before April 7, 2024.

The e-auction was conducted on Friday, January 5, 2024, under Insolvency and Bankruptcy Code 2016, and the Letter of Intent confirming, the Company, as a Successful Bidder was accepted by the Company on Wednesday (January 10, 2024).

Consideration:

As per the filing, the Company has paid Rs.23 Crore as Earnest Money Deposit for participation in e-auction and the balance is payable on or before April 7, 2024. No interest will be charged in case payment is made on or before February 7, 2024. Thereafter interest will be charged @12% p.a. till the date of payment.

Details of the acquisition:

The acquisition, executed through an e-auction platform is expected to help Kalyani Steel increase its presence in the steel manufacturing sector.

The assets that will be acquired under the deal include land, buildings, and plant machinery which are located in Yellareddigudem and Cheruvugattu villages in Nalgonda district, Telangana. The total area is 143.82 acres, hosting a 350,000 MTPA steel billet plant and associated facilities.

Kalyani Steels Share Price Performance:

In the last six months, Kalyani Steels shares have gained 67.69%. The last one year returns from shares of Kalyani Steels have increased 63.90%. The last two years and three years returns from the stock have increased 75.99% and 111.28% respectively. In the last five years, Kalyani Steels stock price has delivered positive 179.55% returns.

About Kalyani Steels Ltd:

Kalyani Steels Ltd is a part of the over $3.0 billion Kalyani Group. Established in 1973, Kalyani Steels is a leading manufacturer of forging and engineering quality carbon & alloy steels using the Blast Furnace route. Although the forging industry in India is the primary market for the company's products, manufacturers of various components for commercial vehicles, two-wheelers, diesel engines, bearings, tractors, turbines, and rail also form a substantial part of the company's clientele.

KSL has earned the status of preferred steel supplier for engineering, automotive, seamless tube, and primary aluminum industry.