Shares of Bombay Dyeing & Manufacturing Company were skyrocketing over 18% early on Thursday after the firm said it would sell a piece of land in Mumbai at a profit to a Japanese firm.

What Happened: Bombay Dyeing has approved the sale of a 22-acre land parcel in Mumbai’s Worli area, along with its floor space index (FSI), to Goisu Realty Private, a unit of Japan’s Sumitomo Realty & Development Company. The deal will occur in two phases and is worth a total of ₹5,200 crore.

If Bombay Dyeing’s shareholders approve the transaction, the company will receive around ₹4,675 crore for phase-I of the sale and the remaining ₹525 crore upon meeting specific conditions for phase-II.

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Nusli Wadia, Bombay Dyeing Chairman, said the deal was expected to yield a pre-tax profit exceeding ₹4,300 crore, bolster financial stability, reduce interest costs by eliminating debt and release encumbered assets.

In March 2022, Bombay Dyeing’s board of directors settled on a strategy to focus on real estate for future growth, the company said in a statement. This entails accelerating flat sales at Island City Centre (ICC), Dadar, and leveraging land banks.

The board has also tentatively approved developing unused land parcels, potentially creating 3.5 million square feet of residential and commercial properties, with a revenue potential of ₹15,000 crore in the coming years.

Price Action: Bombay Dyeing’s share price shot up 18.15% to ₹166 at the start of trade on Thursday.

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