The domestic stock market has witnessed high volatility due to geopolitical tensions. If you want to invest in a multibagger stock for decent returns in the on-going volatile markets, check out Butterfly Gandhimathi Appliances shares. ICICI Securities has a ‘Buy’ recommendation for the multibagger shares which is up more than 141 percent in an annual period with a target price of Rs 1620. The time period quoted by the analyst is one year when the price of Butterfly Gandhimathi Appliances reaches a certain target can reach. Over the past three years, the multibagger share has increased at a CAGR of 75 percent.
About Butterfly Gandhimathic
Butterfly Gandhimathi (BGAL) is one of the leading manufacturers of kitchen and electrical appliances in India, selling its products under the brand name ‘Butterfly’. The company is an industry leader in India for SS LPG ranges and wet table mills and a major supplier of mixer mills and pressure cookers • Over the past three years, BGAL has increased its focus on modern trade/online distribution channels to achieve higher sales growth.
Butterfly Gandhimathi (BGAL) – Acquisition Crompton Greaves Consumer (CGCEL)
Butterfly Gandhimathi Appliances (BGAL) has approved the sale of a 55 percent stake held by the promoter for a consideration of Rs 1,410 crore to Crompton Greaves Consumer (CGCEL). The deal values the company at Rs 2,526 crore. Shares of Butterfly Gandhimathi are up about 7 percent in the past five trading sessions, compared to a fall of about 3 percent in benchmark BSE Sensex.
Crompton Greaves will also be required to make a mandatory open offer to Butterfly’s public shareholders to acquire up to a 26 percent stake in Butterfly at a price of Rs 1,433.9 per share, totaling up to Rs 667 crore. The total acquisition cost (including open offer) is said to amount to Rs 2,077 crore. Furthermore, Crompton is also acquiring trademark rights for a fee of Rs 30.4 crore
The acquisition would enable BGAL to access CGCEL’s dealer network in new regions (primarily Northern India), allowing it to more quickly penetrate these markets and accelerate revenue growth. BGAL’s home appliances are likely to benefit from CGCEL’s pan-Indian presence in electrical goods stores, which the brokerage says could be a major trigger for future price performance.
Butterfly Gandhimathi (BGAL) Financials
“BGAL has shown consistent improvement in financial performance parameters with working capital days, with return ratios improving significantly in FY21. We expect it to maintain the RoCE of ~30 percent+ in FY24E. We model revenue, earnings CAGR of 18 percent and 40 percent, respectively, in FY21-24E,” the note added.
“The acquisition will help Crompton have a stronger connection in South India, expand the distribution network, provide a better right to profit in kitchen appliances and reduce reliance on the Crompton brand. Assuming 5 percent synergy gains by FY24, the Butterfly acquisition will drive profit growth. We believe there will be synergies in the sourcing, distribution, media sourcing and distribution of commodities,” domestic broker ICICI Securities said in a note.
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