Craftsman Automation shares on fire after buying out DR Axion India

Shares of Craftsman Automation, an auto ancillary manufacturer, spiked 370 points or a little over 11 percent after it entered into a definitive agreement to acquire a 76 percent of DR Axion India. At midday, shares of the company were trading at Rs 3,628.

The acquisition will lead to DR Axion becoming a newly acquired subsidiary of the company.

Craftsman Automation has a well-diversified business catering to the domestic supply and export of PVs, CVs, 2Ws along with industrial components and storage solutions. The company portfolio includes cast iron powertrain component machining, aluminum casting/machining, hoists, special-purpose machines etc.

Incorporated in December 2006, DR Axion manufactures aluminium cylinder heads, a critical auto component used in passenger vehicles and the outer shell of internal combustion engines. The company has a single manufacturing facility in Chennai. DR Axion reported a turnover of over Rs 715 crore in FY22.

“The company and DR Axion both operate in the auto components space and have strengths in complementary areas. The acquisition will help both entities leverage their strengths and build better synergies,” the company said in its disclosure filings.

Craftsman Automation shelled out a total of Rs 375 crore for the company acquisition, and the acquisition is expected to be completed by the end of March 2023.

The company was in the news recently after a slew of block deals. Investor Marina III (Singapore) Pte Ltd on December 6 sold its complete 5.48 percent stake in Craftsman Automation. Investor Marina III offloaded 11.56 lakh shares at an average price of Rs 3,200 per share taking the transaction valuation to approximately Rs 370 crore.

India Acorn ICAV, Abu Dhabi Investment Authority (ADIA), and White Oak Capital Management Consultants LLP were the major buyers. Cumulatively, they acquired a 3.3 percent stake in the auto ancillary company.