Pitti Engineering shares rise on acquiring 100% stake in Bagadia Chaitra Industries for ₹125 crore

Pitti Engineering Limited (PEL) shares jumped nearly 4% to reach a high of ₹779.85 apiece on NSE on Tuesday, after the company announced signing an agreement to acquire Bagadia Chaitra Industries for an enterprise value of ₹125 crore.

The cost to acquire Bagadia Chaitra Industries Private Limited (BCIPL) will be determined by adjusting the specified enterprise value for net debt and working capital changes on the closing date, and it is subject to other adjustments that are mutually agreed upon between the parties, the company said in an exchange filing on March 11.

"Pitti Engineering Limited (PEL) has signed an agreement with Bagadia Chaitra Industries Private Limited (BCIPL) and its shareholders to acquire 100% of the equity share capital of BCIPL at an enterprise valuation of ₹124.92 crore," the filing said.

As part of the overall consideration, PEL will inject up to ₹40 crore as funding into BCIPL on the closing date to repay the existing debt in the company.

The closing of the proposed acquisition is subject to the fulfilment of condition precedents as agreed upon between the parties, as per the filing.

On the development, Pitti Engineering Vice-Chairman and Managing Director Akshay S Pitti said, "We are very excited to welcome BCIPL’s leadership team, and their employees to the Pitti group."

Pitti added that the company always believed in continuously adding production capacity at strategic locations and enhancing the value proposition to its valued customers.

The acquisition of BCIPL, he said, is an important step in this direction as it is strategically relevant, provides enhanced operational strength and adds customer base."

Bagadia Chaitra Industries manufactures electrical laminations and aluminium die-cast rotors for AC/DC motors, alternators, pumps and home appliances. The company has a major presence in the southern states. The company operates from Tumkur, Karnataka. It has its manufacturing facilities, with an installed capacity of 18,000 tonnes per annum.

Shares of Pitti Engineering were trading at ₹732.15, down 2.49% apiece, on NSE at 2:34 pm.