APL Apollo Tubes Ltd. has announced a minority investment proposal by its wholly owned subsidiary APL Apollo Mart Ltd. in Shankara Building Products Ltd.

APL Apollo will eventually own ~9.9% of Shankara for a total investment of Rs 1.8 billion (~6% of APL Apollo’s total invested capital at the end of December 2021). This will be done through a combination of purchase of secondary promoter shares (1 million shares at Rs 755/share) and proposed preferential allotment of convertible warrants (1.4 million shares at Rs 750/share).

Shankara was valued at 0.9 times enterprise value/turnover (annualized in FY22). The investment will be funded through internal accruals and is expected to contribute to earnings per share and return on capital employed from year one.

APL Apollo sees an opportunity to potentially double its existing sales from Shankara.

This post APL Apollo – Proposed Shankara Investment to Strengthen Structural Steel Pipe Distribution : ICICI Securities

was original published at “https://www.bloombergquint.com/research-reports/apl-apollo-proposed-investment-in-shankara-to-aid-distribution-of-structural-steel-tubes-icici-securities”