Gabriel India shares in 20% upper circuit on group reorganisation plans

Shares of auto components manufacturer Gabriel India Ltd., surged 20% on Tuesday, July 1, after the company announced a scheme of arrangement for the amalgamation of Anchemco India Pvt. Ltd. into Asia Investments Pvt. Ltd. and the subsequent demerger of the automotive undertakings of the company.

The company said that this move is part of the Group's revenue target of ₹50,000 crore by 2030.

In its investor presentation, Gabriel highlighted that it has been looking at potential acquisitions through scheme of arrangements in companies where promoters of Gabriel hold stake.

As part of the scheme, Anchemco, an entity involved in the manufacturing and sale of automobile products like brake fluid, radiator coolants, diesel exhaust fluid among other products, will be merged into Asia Investments Pvt. Ltd.

Post this, business undertakings of Asia Investments Pvt. Ltd., comprising of Anchemco, along with investments in other entities like Dana Anand, Henkel Anand and ACYM will be demerged and later merged into Gabriel India. Asia Investments has other businesses along with other non-auto businesses, which will remain with them post the demerger.

Gabriel India will issue 1,158 shares of the company to promoters of AIPL, for every 1,000 shares they own. The deal is being done at a multiple of 8 times financial year 2025 Enterprise Value to Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).

The deal is subject to approval from the company's board, creditors, stock exchanges, NCLT and shareholders of the company and is likely to take effect within the next 10-12 months, provided the approvals are received within this timeframe.

Gabriel has set April 1, 2025 as the appointed date for the merger of Anchemco into AIPL, while the appointed date for the demerger and subsequent merger has been set as April 1, 2026.

The company has cited its transformation, expansion of domestic and global presence, simplification of the group structure and addressing investor queries over product diversification and M&A strategy as some of the key rationale behind this move. The investor presentation further adds that this move has increased the scale of the company without any leverage or cash outlay.

Shares of Gabriel India are locked in a 20% upper circuit on Tuesday. The stock had already gained 20% in he previous five trading sessions.