Astral forays into paint business through acquisition of Gem PaintsASTRAL - 1766 Change: 53.40 (3.12 %)
News: Astral Ltd will acquire 51% equity stake in Gem Paints for the consideration of Rs 194 crore. The balance 49% equity stake will be acquired by Astral over a period of 5 years in tranches as per the Share Purchase Agreement entered between the parties.
Views: Gem Paints is into the business of manufacture and supply of various types of paints, varnishes, coatings, products related to home décor, industrial paints since 1980. The company has recorded revenue CAGR of 8% in FY20-22 (FY22 provision revenue of ~Rs 215 crore) with average EBITDA margin of ~16%. With this acquisition, Astral has now four segments i.e. Pipes, Adhesive, Sanitaryware and Paints. Off these segments, sanitaryware and paint business are yet to start operation under the umbrella of Astral. We would like to see company’s future capital allocation strategy and EBITDA margin movement in the new business.