Escorts completes acquisition of Japanese Agri equipment maker; stock opens positive
The agricultural machinery major, Escorts Ltd on Monday, announced about its new acquisition i.e. Kubota Agricultural Machinery India Pvt Ltd (KAI). The acquired company has been incorporated under the laws of India from Kubota Corporation of Japan.
During the previous fiscal year, the board had approved the acquisition of 2,00,00,000 equity shares of KAI (Japan), constituting 40 per cent of the share capital at Rs 45 per equity share. The stated transaction amounts to an aggregate value of Rs 90 crore, all for cash.
The acquisition further strengthens the scope of the agricultural business of the company. As of the end of FY20, the company had reported four plants in India with a total production capacity of tractors and components of 1,20,000 units annually. In terms of its international presence, the company has one plant in Poland, which is a 100 per cent subsidiary with an installed capacity of 2,500 units annually. During the previous financial year, the company had informed that it has an under-construction plant as a part of the joint venture with Kubota, with an annual capacity of 50,000 units.
The stock has already proven to be a multibagger in the last five years. From October 2015 to October 2020, the stock registered stellar returns of 650 per cent. Being the market leader and a prominent agri machine player, the company has enjoyed higher valuations.
On Tuesday, the stock opened higher by 2 per cent at Rs 1,260 on BSE, resuming the historic gaining streak.