Rane (Madras) shares jump 6%, hit 52-week high after key business update; check details

Shares of Rane (Madras), part of the Rane Group founded in 1929 and a manufacturer and supplier of automotive components, rallied as much as 5.97% to hit their 52-week high of ₹1,224.90 apiece on the NSE in the early trade on Wednesday, July 1.

The buying interest in the stock could be attributed to the key business update the company shared.

The auto component company on Tuesday said it has entered into an agreement with Hindustan Composites to acquire the friction business for an enterprise value of ₹370 crore.

As part of the acquisition, which is subject to the terms of the agreement, RML also acquires the brand "COMPO", which reinforces Rane's leadership position by expanding its reach across segments, distributors, fleet operators and aftermarket channels, the Chennai-based company said.

The transaction, which remains subject to customary regulatory approvals and closing conditions, is expected to be completed by the end of the second quarter, the company said.

HCL's friction business

HCL's friction business is a leading supplier of friction materials, with over six decades of experience across the automotive, railway, farm tractor, and industrial sectors, and having a product portfolio that includes brake linings, brake pads, brake blocks, clutch facings, and industrial friction products, backed by in-house R&D and a pan-India distribution network.

It operates two manufacturing facilities in Paithan and Bhandara in Maharashtra.

Based on the latest audited financial results, the friction business reported revenue of Rs 315.04 crore and a profit before tax of ₹40.29 crore.

Upon completion, the acquisition will create a ₹1,000-plus crore friction materials business, establishing RML as the market leader across all major segments, it said.

What the chairman said

"This acquisition leverages Rane's ability to create a market-leading friction solutions platform. By integrating these complementary businesses, we are uniquely positioned to address the evolving needs of India's transportation sector while driving operational excellence and long-term value for our stakeholders," said Harish Lakshman, Chairman, Rane Group.

RML said it already has leadership in the friction business, spanning passenger vehicles, two-wheelers, aftermarket and railways, alongside an export business aggregating revenue of over ₹700 crore.

Besides this, the transaction is expected to unlock substantial operational synergies through manufacturing scale, an expanded distribution network and enhanced R&D capabilities, it said, adding the expanded footprint is expected to serve as a critical launchpad for future business expansion.

About Rane (Madras)

Rane (Madras) Limited is engaged in the manufacturing of steering and suspension linkage products, steering gear products and specialised aluminum high pressure die-casting products. It has two divisions, namely Steering and Linkages Division (SLD) and Light Metal Casting India Division (LMCI).

The company operates in a single reportable segment, namely components for the transportation industry. Its products include steering gear products, suspension and linkage products, hydraulic products, light metal casting products, and other automotive parts.

Its products serve a variety of industry segments, including passenger vehicles, commercial vehicles, farm tractors, two-wheelers, three-wheelers, railways, and stationary engines. It has manufacturing facilities in Tamil Nadu, Puducherry, Karnataka, Uttarakhand, and Telangana.