Lumax Auto Technologies Ltd.'s shares soared over 10 percent on Monday following its announcement of acquiring a 75 percent stake in auto components supplier IAC International Automotive India (IAC India) for a total consideration of Rs 587 crore in cash.

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The stake will be acquired from IAC India's existing shareholder IACNA Mauritius Ltd. and the deal is expected to be completed by March 2023.

IAC India is a Tier-1 interior systems and components supplier to key automotive OEMs in the country including Mahindra & Mahindra, Maruti Suzuki, Volkswagen, and Volvo Eicher Commercial Vehicles.

It also has an engineering centre providing advanced design and engineering services to customers in India and overseas.

In the nine months of the current fiscal year, IAC India reported a total revenue of Rs 470 crore. Its revenue increased by 70 percent year-on-year to Rs 481 crore in the fiscal year 2022 from Rs 284 crore a year ago.

IAC will continue to hold 25 percent post-acquisition. IAC India’s day-to-day business and operations will continue to be managed by its existing professional management team.

The deal is being done at an implied Enterprise Value to EBITDA multiple of 6.1 times on calendar year 2022 operating profit or EBITDA. The transaction is EPS accretive for Lumax Auto Tech.

The company also stated that the partnership offers the opportunity for industry leaders in lighting and interior systems to offer integrated solutions to meet the rapidly evolving technological advancements in the automotive sector.

As the sector moves towards higher value-added and niche content in interior systems, the company looks to leverage this platform to deliver industry-leading solutions to their customers and enhance their kit value per vehicle.

According to Lumax, the deal is EPS accretive and will lead to the acquisition and addition of significant business in the PV and SUV segment as well as expansion of the product portfolio in plastics products.

Lumax Auto shares are trading 11.69 percent higher at Rs 246.55.

(Edited by : Rukmani Krishna)

First Published:Feb 20, 2023 1:08 PM IST