Auto components and equipment maker, JBM Auto is the leading contender to acquire a controlling stake in automaker SML Isuzu, according to media reports.
SML Isuzu’s Japanese promoters are looking to exit the company, and have entered into an advanced stage of discussions with JBM Auto for the sale of their stake.
Japan’s Sumitomo Corporation, which holds 43 per cent of India-based SML, is looking to exit its operations in India and talks are at an advanced stage. However, the report did not mention any other bidders for the stake.
JBM is mulling various options to acquire the shareholding, including cash as well as a share swap deal, added Reuters in its report.
JBM has started a due diligence process, and the deal is likely to value SML at a premium to its current share price, it added.
The potential acquisition is expected to allow JBM Auto to gain a foothold in new markets related to commercial vehicles, including the school bus segment and will also benefit from the extensive dealer network of SML Isuzu.
In Q4FY23, JBM earned a net profit of ₹28.4 crore, declining by 66% from ₹85.3 crore in the same quarter a year ago. Revenue also declined by 5.7% to ₹1,010 crore as against ₹1,072 crore in Q4 of previous fiscal.
EBITDA dipped by 11.5% to ₹108 crore in Q4FY23, as against ₹122 crore in corresponding period of the last year. EBITDA margin is at 10.7%, contracting from 11.3% in Q4FY22.
Nevertheless, in a good news to investors, JBM Auto’s board of directors recommended a final dividend of 65% aggregating to ₹1.30 per equity share for FY23.
