From Shirts To EVs and Aerospace? Raymond Makes An Acquisition, Shares Gain 3.5%

Raymond Group said on Friday it will buy a 59.25% stake in Maini Precision Products for ₹682 crore. This move aims to bolster Raymond’s engineering business and give it exposure to the up-and-coming aerospace, electric vehicles and defense sectors.

What Happened: The transaction will take place through Ring Plus Aqua, a subsidiary of JK Files and Engineering. Following the acquisition, Raymond intends to merge the businesses of JK Files, RPAL, and MPPL into a new subsidiary. Raymond will hold a 66.3% stake in the new entity, which will focus on precision engineering products.

The estimated consolidated revenue for the new entity in the last financial year was ₹1600 crore, with an EBIDTA of ₹220 crore. Gautam Maini, the founder of Maini, will lead the consolidated Engineering business. This newly formed business will serve top Global original equipment manufacturers and tier 1 manufacturers across aerospace, defense, automotive, and industrial sectors.

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Raymond Chairman and Managing Director Gautam Hari Singhania said the acquisition will significantly contribute to the growth of its engineering business and provide opportunities for expansion into sectors like aerospace, defense and EV. He noted that these sectors are experiencing robust growth, offering substantial opportunities for leverage.

Why It Matters: MPPL is a diversified business with 11 manufacturing facilities in India, split into two verticals: aerospace and automotive and industrial. The aerospace segment manufactures precision products for aerospace and defense, while the automotive and industrial sector produces precision products.

Raymond has been engaged in restructuring its business in recent years, venturing into new avenues. Earlier this year, it divested its consumer care business to Godrej and demerged its lifestyle business. The company has also entered the real estate business.

According to Raymond, the group will maintain a net cash-positive position after the transaction, considering its robust free cash generation and minimal capital expenditure requirements.

Price Action: Raymond’s share price was up 3.57% at ₹1,878.10 in afternoon trade on Friday.

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