Ashish Kacholia-Backed Small Cap Stock Jumps 6% After Announcing ₹3,800 Cr Acquisition

Shares of PCBL surged up on Wednesday morning halting the stock’s two straight session losing streak.

What Happened: The surge today comes as the company’s board on Tuesday evening granted in-principle approval for the acquisition of 100% of the issued and paid-up share capital of Aquapharm Chemicals Private Ltd (ACPL) for a total consideration of ₹3,800 crore.

PCBL Ltd intends to finance this significant acquisition using a combination of internal accruals and external fundraising by the company and its affiliates or associates.

This acquisition marks PCBL Ltd’s entry into the global speciality segments of water treatment chemicals and oil and gas chemicals, aligning with the company’s vision to build a multi-platform global speciality chemical business portfolio.

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Aquapharm Chemicals Private Ltd, based in Pune, is a speciality chemicals company with a consolidated turnover of ₹2,008 crore for the year ended March 31, 2023. ACPL manufactures a range of speciality chemicals such as phosphonates, biodegradable chelating agents, polymers, biocides, and oil field chemicals, with applications in diverse industries.

The proposed transaction currently awaits approval from the Competition Commission of India (CCI). If all conditions are met, the company expects the acquisition to conclude in the next 2-3 months from the date of the share purchase agreement execution.

Brokerage Reactions: Analysts were mostly impressed by the company’s strategic acquisition. JM Financial maintained its “buy” rating on the stock with a target price of ₹290. The brokerage firm termed the acquisitions as a significant milestone for the company’s prospects of turning into a full-fledged chemicals company.

Nuvama also maintained its “buy” rating raising the price target to ₹270 from ₹209. The brokerage said that the acquisition would upgrade the business model and margin profile.

Price Action: PCBL’s share price was up 4.35% to trade at ₹265.30 on Wednesday morning. Ashish Kacholia is a long-time investor in the stock and owns a 1.88% stake.

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