Stock market buzzer: This Rs 4000 small cap stock moved to over Rs 5000 in one day

By: | Updated: August 31, 2017 3:34 PM

Amid the choppy trade in the Indian equity markets on Thursday, there is one stock above Rs 4,000 which gained nearly Rs 900 to over Rs 5,000 in today’s trade.

The stock of Schaeffler India Ltd which closed at Rs 4,262.85 on Wednesday advanced Rs 852.55 to the day’s high of Rs 5,115.4, today. (Image: Reuters)

Amid the choppy trade in the Indian equity markets on Thursday, there is one stock above Rs 4,000 which gained nearly Rs 900 to over Rs 5,000 in today’s trade. The stock market activity on the Dalal Street was quite muted today, as the benchmark Sensex hovered in negative territory till the mid-morning trade. However, the 30-share barometer recovered marginally and inched higher in the last 30 minutes of trade.

Shares of Schaeffler India Ltd skyrocketed as much as 20% to the day’s high of Rs 5,115.4 after its parent company Schaeffler AG yesterday announced plans to merge its three group firms in India to create a Rs 3,570 crore single entity supplying parts for automotive and industrial applications. Schaeffler India Ltd is a subsidiary of German auto component major Schaeffler AG. The stock of Schaeffler India Ltd which closed at Rs 4,262.85 on Wednesday advanced Rs 852.55 to the day’s high of Rs 5,115.4, today.

As part of the plan, two group firms, INA Bearings India Pvt Ltd (INA India) and LuK India Pvt Ltd (LuK India) will merge with Schaeffler India Ltd. The boards of directors of Schaeffler India Ltd, INA India, and LuK India, at their respective meetings held on 30 August 2017 approved the draft scheme of amalgamation, Schaeffler AG said in a statement. The merger will create a leading Indian automotive and industrial supplier with about Rs 3,570 crore in revenues with nearly 3,000 employees, four plants and one R&D center, the statement said.

As part of the merger, Schaeffler India will issue 10 equity shares to shareholders of INA India, for every 65 equity shares held. It will also issue 10 equity shares to shareholders of LuK India, for every 35 equity shares held. Schaeffler India will increase its outstanding equity shares to 31.26 million with the issue of 14.64 million new equity shares. Post the merger, promoter group holding in Schaeffler India will be 74.13%. At present, the promoters hold 51.33% in Schaeffler India and 100% in both INA India and LuK India.

“This is an important milestone towards creating a single Schaeffler entity in India and increasing long term value for all stakeholders,” PTI reported citing Schaeffler AG CEO Klaus Rosenfeld. This raises the corporate profile and presence of Schaeffler in India and creates an umbrella brand over three key product brands LuK, INA, and FAG, he added.

“The merger will strengthen our position, leveraging our superior technology, quality and innovation to deliver superior solutions to our customers,” PTI reported citing Schaeffler India Managing Director and CEO Dharmesh Arora. Schaeffler has operated in India for more than 50 years, growing from a bearing manufacturer to an automotive and industrial supplier, he added. The merger is subject to shareholders and regulatory approvals and is expected to take approximately 12 months, in the ordinary course, the company said.

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