- 18 Oct 2024
- ICICI Securities
BHARAT FORGE ACQUIRES COMPANY IN CV AXLE SPACE
News: Bharat Forge has announced an acquisition of AAM (American Axle & Manufacturing Holdings) India Manufacturing Corporation Pvt. Ltd. for ₹ 544.53 crore, securing a 100% stake in the company, which specializes in manufacturing axles for light, medium, and heavy-duty commercial vehicles. This strategic move includes AAM India's operations in Pune and Chennai and its Engineering and Development Centre in Pune, aimed at expanding Bharat Forge's footprint in the commercial vehicle axle sector.
Views: The acquired business has a turnover of ~₹ 1,385 crore in FY24 and is debt-free. As per management’s commentary this acquisition will be EPS and ROE accretive from first year. Bharat forge will drive the acquired company’s technology to further create new products. This transaction will enable BFL to expand its customer base and expand its manufacturing presence in India. The valuations at which it is acquired is reasonable in our view at 0.4x P/S however its strategic play given promoters have personal investment in such space through Automotive Axle is a bit unclear.
Impact: Neutral