Crompton Greaves Consumer to acquire 55% stake in Butterfly GandhimathiBUTTERFLY - 1043 Change: 14.30 (1.39 %)
News: Crompton Greaves Consumer Electricals (Crompton) has signed definitive agreements on February 22, 2022 with certain members of the promoter group of Butterfly Gandhimathi Appliances (Butterfly) to acquire (a) upto 55% stake at Rs.1,403.00 per equity share, aggregating upto Rs.1,379.68 crore and also acquire certain Butterfly trademarks in allied and cognate classes from promoter group entities (Trademarks) for a consideration of Rs.30.38 crore. Crompton will launch the mandatory open offer to the public shareholders of Butterfly, for acquiring up to 26% stake in Butterfly at a price of Rs.1,433.90 per equity share, aggregating upto Rs.666.57 crore for an aggregate total consideration ofupto Rs.2,076.63 .
Views: At Rs.1,403 / share, the EV is ~Rs.2500 crore On TTM basis, Butterfly has reported revenues/EBIDTA of Rs. 1000 crore, Rs.89 crore, respectively. Accordingly, EV/sales is ~2.5x and EV/EBIDTA is ~28x. Butterfly had average gross margin of ~40% during FY18-21. We believe that stake acquisition by Crompton can lead to consistent improvement in financials and provide impetus to growth over the medium to long term. We expect 15% revenue CAGR and enhancement in EBITDA margin from 9% level to 11-12% over the next two three years, which would aid in improving the return ratio profile of the company.