4:1 bonus shares & Rs 2,326 crore order book: This multibagger engineering company emerged as the highest bidder in the acquisition of EMC Ltd

The stock gave multibagger returns of 164 per cent in 1 year and a whopping 960 per cent in 5 years.

Salasar Techno Engineering Limited emerged victorious in an e-auction to acquire EMC Limited (under Liquidation). The court-appointed Liquidator facilitated the auction, which saw Salasar Techno Engineering emerge as the top bidder with a winning bid of Rs 178 crore. Salasar Techno Engineering has been officially declared the successful bidder and is now awaiting the finalization of the sale by fulfilling the terms and conditions outlined in the Letter of Intent issued by the Liquidator. This letter details the remaining steps required to finalize the acquisition and convert EMC Limited into a going concern under Salasar Techno Engineering's ownership.

EMC Limited was incorporated in 2010 but has roots dating back to 1853. Despite a history of large project completions and overseas ventures, EMC has been facing financial difficulties, reporting a net loss of Rs 13,117.58 lakh as of March 31, 2023, with a turnover of Rs 70.7 crore for the same period. The acquisition is expected to be completed within 90 days and will give SALASAR full ownership (100 per cent) of EMC Limited's assets and properties, potentially expanding SALASAR's operations and creating synergies within the EPC industry.

Today, the Indian stock market was flattish, with the BSE Sensex and NSE Nifty indices plunging 0.10 per cent each, respectively. Though the market was flattish, shares of Salasar Techno Engineering hit 5 per cent to Rs 22.55 per share from its previous closing of Rs 21.50 per share. The stock’s 52-week high is Rs 33.95 and its 52-week low is Rs 7.25.

STEL, established in 2006, acts as a single source for customized steel infrastructure solutions in India. They offer comprehensive services encompassing engineering, design, fabrication, galvanization, and installation. Their product range includes various towers (telecom, power transmission, lighting, etc.), substations, solar structures, railway electrification components, bridges, and custom steel structures. Additionally, STEL acts as an EPC contractor, undertaking complete project management for rural electrification, power lines, and solar plants. As a leading manufacturer with a substantial production capacity, they've supplied numerous structures across India and internationally, solidifying their position as a prominent player in infrastructure development.

The company has an order book of Rs 2,326 crore as of December 31, 2023, out of which Rs 1,879 crore are domestic EPC orders, Rs 221 are international EPC orders, orders under heavy steel structure division are worth Rs 110.7 crore, Monopoles orders are worth Rs 72.1 crore and exports orders (telecom towers and poles) are worth Rs 43.2 crore.  

Salasar Techno Engineering Ltd. (STEL) has secured two major contracts. In a joint venture with Rail Vikas Nigam Ltd (RVNL) where STEL holds a 49 per cent stake, they won a Rs 173.99 crore project from Madhya Pradesh Power Transmission Company Limited (MPPTCL) to construct transmission lines and feeder bays in Eastern Madhya Pradesh within 18 months. Additionally, STEL secured a significant Rs 1,033.78 crore contract from Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) to improve the state's electricity distribution infrastructure. This project involves comprehensive service delivery in Coimbatore and development work across various districts to reduce energy losses and enhance operational efficiency within the distribution network, demonstrating STEL's commitment to infrastructure advancement and sustainable development in Tamil Nadu.

According to Quarterly Results (Q3FY24), the net sales increased by 26.32 per cent to Rs 304.35 crore and net profit increased by 56.75 per cent to Rs 167.10 crore compared to Q3FY23 while in nine-month results (9MFY24), the net sales increased by 18.43 per cent to Rs 841.10 crore and net profit increased by 40.89 per cent to Rs 35.96 crore compared to 9MFY23. As of December 2023, promoters own 63.07 per cent, FIIs own 8.85 per cent and the public owns 28.08 per cent.

The company issued bonus shares in a 4:1 ratio to its shareholders on February 1, 2024 (ex-date). This means that for every one share a shareholder held, they received four additional shares. Additionally, the company distributed a dividend of Rs 0.10 per share on September 15, 2023 (ex-date). The stock gave multibagger returns of 164 per cent in 1 year and a whopping 960 per cent in 5 years. Investors should keep an eye on this Small-Cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.