Auto ancillary stock ended up by 11% post acquisition valuing worth Rs. 587 Cr

With a market worth of ₹1,667.48 Cr., Lumax Auto Technologies is a small-cap business that operates in the auto ancillary industry. The Lumax - D.K. Jain Group company Lumax Auto Technologies Limited is a leader in the production of automotive parts. The company has inked an agreement to acquire a majority stake in IAC International Automotive India Private Limited (“IAC India”) from the International Automotive Components Group (“IAC Group”) at a valuation of Rs. 587 crores.

As part of the agreement, IAC would retain a 25% stake in IAC India while a 75% stake will be bought on a fully diluted basis through an SPV (acquisition vehicle) for ₹440 crore, which will be paid in cash and backed by debt and internal accruals. Cash flow for IAC India to be used for debt repayment and strong free cash flow generation in LATL & IAC India will ensure debt repayment in 5 years, Lumax Auto Technologies added in a statement.

The key acquisition highlights include, the addition of significant business in the PV & SUV segment, expansion of product portfolio in plastics, increased content per vehicle, long-term partnership with a global leader in plastic interiors and exteriors, IAC technological capabilities & engineering center to be leverage across products, strong and experienced independent professional management team, interiors and lighting to offer integrated solutions, LATL to add new customers to IAC’s existing business, LATL’s current product portfolio can be leveraged by doing interior vehicle development and EPS accretive acquisition.

“Lumax and IAC will work as strategic partners and leverage their respective competitive strengths to drive IAC India’s business forward in the coming years and work towards unlocking potential synergies across products, customers, technology and manufacturing excellence. IAC India’s day to day business and operations will continue to be managed by its existing professional management team which has successfully delivered strong and consistent results over the last decade,” said the Board of Directors of Lumax Auto Technologies at the announcement.

Mr. Deepak Jain, Chairman of Lumax said, “This is a marquee milestone in our long-term growth strategy of strategic partnerships with global industry leaders. With the group’s existing expertise in automotive lighting and plastics, it provides the opportunity to combine our competitive strengths across automotive lighting, plastics and interiors to provide complete solutions to our customers. We are excited with the opportunity to partner with IAC and work together with the team at IAC India with the overall vision of stability, continuity and growth in the coming years".

Mr. Anmol Jain, Managing Director of Lumax said, “This strategic partnership will help us expand our existing business in four wheeler automotive plastics and serve our customers with a wider product range. As the sector moves towards higher value-added and niche content in interior systems, we will look to leverage this platform to deliver industry leading solutions to our customers and enhance our kit value per vehicle. Together with IAC, our goal will be to take this business to the next level by unlocking synergies across products, customers, technologies and manufacturing excellence”.

Mr. David Prystash, Chief Executive Officer of the IAC Group said, “We are extremely delighted to join hands with the Lumax group and believe that together with Lumax, the IAC India business can be propelled upwards in the coming years. This partnership will offer immense opportunity to expand our business in India and continue to deliver quality solutions to our customers. It also 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”.

Mr. Sunil Koparkar, Managing Director of IAC India said, “This partnership will provide us the platform to combine world-class technology and engineering capabilities, complimentary products, customer relationships, manufacturing excellence and a strong independent professional team to take the business to the next level in the coming years”.

The shares of Lumax Auto Technologies closed today on the NSE at ₹245.30 apiece level, up by 11.12% from the previous close of ₹220.75. The stock recorded a net NSE + BSE volume average of 2,045,162 shares and a delivery volume average of 36,587,948 shares or 17.89%.