South Asia's 2nd largest winding wire manufacturer acquires 60 per cent stake in Tefabo, achieving 100 per cent YTD returns!

The stock has doubled this year, delivering nearly 100% returns

In an exciting development, Ram Ratna Wires Limited (RRWL), India's second-largest manufacturer of winding wires, has acquired a 60 per cent stake in Tefabo Product Private Limited, a company specializing in manufacturing fabricated components for renewable energy and infrastructure. 

This strategic acquisition allows RRWL to broaden its scope and capitalize on the growing demand in the renewable energy and railway sectors, aligning with India's infrastructure and sustainability goals.

Why This Acquisition Matters

RRWL has built a solid reputation for producing a wide range of enameled copper wires and other electrical components, with a strong market position and extensive distribution in India and beyond. 

This acquisition marks a significant step for RRWL, positioning it to diversify into renewable energy components—a sector poised for rapid growth as India aims for a carbon-neutral economy by 2070.

The renewable energy sector, supported by government initiatives and growing interest in sustainability, is seeing unprecedented expansion. By acquiring a majority stake in Tefabo, RRWL gains access to an established player in renewable energy and infrastructure, with Tefabo already supplying key components to various multinational corporations. Tefabo’s expertise includes precision fabrication and structural components for the renewable energy, railway, and power sectors.

Financial Impact and Growth Potential

For shareholders, the acquisition of Tefabo is expected to be financially beneficial, contributing positively to RRWL’s earnings. In FY24, Tefabo reported a revenue of approximately Rs 78 crores, with robust growth and increasing profitability. With an ROE (Return on Equity) of 66.43 per cent for the last fiscal year, Tefabo’s performance complements RRWL’s strategic focus on growth-oriented investments in high-demand sectors.

This move will allow RRWL to deepen its portfolio and address evolving client needs in renewable energy and transportation. RRWL's Managing Director, Shri Mahendrakumar Kabra, highlighted that the company’s entry into fabricated components reflects its commitment to supporting a sustainable future. By leveraging Tefabo’s fabrication capabilities, RRWL will be better positioned to offer solutions for India's renewable energy and railway infrastructure needs.

A New Chapter for Ram Ratna Wires

For over 30 years, Ram Ratna Wires has been a leader in manufacturing high-quality winding wires, with a strong market position and a brand synonymous with quality. This acquisition not only diversifies RRWL's offerings but also marks a strategic shift toward sustainability-focused sectors. With plans to enhance capacity and expand its footprint in renewable energy, this acquisition positions RRWL to grow alongside India’s green energy initiatives.

The Tefabo acquisition is part of a broader growth strategy for RRWL as it eyes high-growth sectors aligned with India’s long-term development goals. It reflects the company’s dedication to meeting industry demands and providing value-added solutions in emerging sectors that support environmental goals.

The stock has doubled this year, delivering nearly 100% returns and commanding a higher P/E ratio than the industry average (44x compared to 39.2x).

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