Shares of Lumax Auto Technologies surged 12 per cent to Rs 248.20 in Monday’s intra-day trade, after the company signed agreement to acquire majority stake (75 per cent) in IAC International Automotive India Private Limited (IAC India) from the International Automotive Components Group (IAC Group) at around Rs 587 crore.
The 75 per cent shareholding to be acquired in IAC India will be on a fully diluted basis through SPV (acquisition vehicle), on cash consideration, and to be paid by internal accruals & external debt.
"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," Lumax Auto said.
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Lumax Auto Technologies is a leading Tier-1 automotive systems and components supplier. On the other hand, the IAC Group is a leading global supplier of powertrain-agnostic automotive interior, exterior systems, and components including instrument panels, cockpits and consoles, door and trim systems, headliner and overhead systems and other interior and exterior components.
With global revenues in excess of $3 billion, the IAC Group is a strategic supplier to leading automotive OEMs across the world, with 45 manufacturing facilities across 17 countries.
IAC India is a well-established Tier-1 interior systems and components supplier to key automotive OEMs in India including Mahindra, Maruti Suzuki, Volkswagen and Volvo Eicher Commercial Vehicles among others. IAC India had revenue of Rs 481 crore as of FY22 and of Rs 470 crore for the first nine months (April to December) of FY23.
On objects of acquisition, Lumax Auto said that the partnership would offer opportunity for industry leaders in lighting and interior systems to offer integrated solutions and meet rapidly evolving technological advancements in the automotive sector.
“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,” the company said.
The implied valuation for the acquisition will come around ~6x EV/EBITDA, which analysts believe, is inexpensive given the target is earning ~Rs 90 crore at EBITDA level, margins at 15 per cent with RoCE of 35 per cent.
"The target company is also PV heavy with ~87 per cent exposure with balance being from CV domain, both of which are expected to grow in healthy double digits in the coming two years. Moreover, it derives ~69 per cent of sales from M&M, which is doing extremely well in the SUV space," said analysts at ICICI Securities.
Lumax Auto Tech.