- 11 Dec 2024
- ICICI Securities
ANNOUNCES ACQUISITION OF 100% EQUITY STAKE IN TGPEL PRECISION ENGINEERING LIMITED
News: In a press release, On December 10, 2024, Shriram Pistons & Rings Limited (SPRL) announced acquisition of 100% shareholding in TGPEL Precision Engineering Limited through its subsidiary, SPR Engenious Limited, marking a strategic move to enhance SPRL's capabilities in high precision injection moulded components. The target is being acquired at an Enterprise Value of ₹220 crore. TGPEL, established in 2008 and formerly known as Timex Group Precision Engineering Limited, operates two advanced manufacturing facilities in Noida. The transaction is expected to close by the end of December 2024.
Views: This acquisition aligns with Shriram Pistons & Rings Limited's (SPRL) strategy to diversify its product portfolio and enhance its capabilities in high-precision injection moulded components, which are increasingly important in various industries, including automotive and consumer goods. Given TGPEL's established presence, consistent revenue growth, and technological expertise in precision moulding, this acquisition could be seen as a strategic move that not only strengthens SPRL's market position but also provides opportunities for synergy and expansion into new markets. The target is being acquired at a valuation of ~1.8x P/S, based on reported sales of ₹118 crore for FY 2023-24. We further await the margin as well as return ratios profile of the target before formulating any definitive view on the stock.
Impact: Neutral