The domestic equity market has been witnessing high volatility owing to geopolitical tensions. If you are looking to invest in a multibagger stock for a decent return in the on-going volatile markets, you can check out Butterfly Gandhimathi Appliances stock. ICICI Securities has ‘Buy’ recommendation on the multibagger stock that is up over 141 per cent in a year’s period with a target price of Rs 1620. Time period given by analyst is one year when Butterfly Gandhimathi Appliances price can reach defined target. Over the last three years, the multibagger stock has appreciated at a CAGR of 75 per cent.
About Butterfly Gandhimathi
Butterfly Gandhimathi (BGAL) is one of the leading manufacturers of kitchen & electrical appliances in India and sells its products branded as ‘Butterfly’. The company is a market leader in India for SS LPG stoves & table top wet grinders and major supplier of mixer grinders & pressure cookers • Over the last three years, BGAL has enhanced its focus on modern trade/online distribution channels to capture higher revenue growth.
Butterfly Gandhimathi (BGAL) – Crompton Greaves Consumer (CGCEL) Acquisition
Butterfly Gandhimathi Appliances (BGAL) has approved sale of 55 per cent stake held by promoter for a consideration of Rs 1,410 crore to Crompton Greaves Consumer (CGCEL). The deal values the company at Rs 2,526 crore. Shares of Butterfly Gandhimathi have surged about 7 per cent in the last five trading sessions as compared to about 3 per cent fall in benchmark BSE Sensex.
Crompton Greaves will also have to launch mandatory open offer to the public shareholders of Butterfly, for acquiring up to 26 per cent stake in Butterfly at a price of Rs 1,433.9 per equity share, aggregating up to Rs 667 crore. The total acquisition cost (including open offer) would be up to Rs 2,077 crore. Further, Crompton will also acquire trademark rights for a consideration of Rs 30.4 crore
The acquisition would enable BGAL to access CGCEL’s dealer network in new geographies (mostly north India), which will enable it to penetrate these markets faster and accelerate its revenue growth. BGAL’s appliances business is likely to benefit from CGCEL’s pan-India presence in electrical goods stores, which could act as key triggers for future price performance, as per the brokerage.
Butterfly Gandhimathi (BGAL) Financials
“BGAL has shown consistent improvement in financial performance parameters with working capital days, return ratios getting significantly enhanced in FY21. We expect it to maintain RoCE of ~30 per cent + in FY24E. We model revenue, earnings CAGR of 18 per cent, 40 per cent, respectively, in FY21-24E,” the note added.
“The acquisition will help Crompton to have stronger connect in south India, expand distribution network, will offer better right-to-win in kitchen appliances and reduce over dependence on Crompton brand. Assuming 5 per cent synergy benefits by FY24, the Butterfly acquisition will lead to earnings accretion. We believe there will be synergies in raw material sourcing, distribution, media sourcing and distribution,” said domestic brokerage house ICICI Securities in a note.
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