Industry Leader Makes Surprise Move with 51% Stake
NTC Industries Limited: The Company has entered into a Share Swap Agreement (‘SWA’) on 16th February, 2024 with Solitude Flame Private Limited (‘SOL’) to acquire 51% stake (total share capital) of SOL in exchange of 45,11,535 equity shares of face value of Rs. 10 each of NTC Industries limited, by way of Preferential Issue, at an Issue price of Rs. 130 per Equity Share for an aggregate amount of up to Rs. 58,64,99,550.
This acquisition will help to expand into the field of paper. After this acquisition, SOL will become subsidiary of the NTC Industries.
Read Full Press Release : Preferential Issue of upto 45,11,535 No. of Equity Shares
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How Entering in Share Swap Agreement Could Benefit A Company
Entering into a share swap agreement can offer several potential benefits to a company, depending on the specific terms and goals of the agreement. Here are some of the key advantages:
Strategic benefits:
Mergers and acquisitions: Share swaps can be used to acquire another company without using cash, which can be beneficial if the acquiring company has limited cash reserves or wants to conserve them.
Joint ventures: Share swaps can be used to create a joint venture between two companies, allowing them to combine resources and expertise to pursue a common goal.
Minority investments: Share swaps can be used to make minority investments in other companies, gaining exposure to their growth potential without acquiring a controlling stake.
Cross-border expansion: Share swaps can help companies expand into new markets by partnering with local companies, leveraging their knowledge and network.
Financial benefits:
Earnings per share (EPS) accretion: If the acquired company’s earnings are higher than the dilution caused by issuing new shares, the acquiring company’s EPS can increase.
Diversification: Share swaps can help companies diversify their business lines and reduce their exposure to specific sectors or markets.
About NTC Industries Limited
NTC Industries Limited is one of the oldest cigarette manufacturers in India. They have a strong presence in the domestic market as well as in international markets. The company is known for its high-quality products and has received recognition for its outstanding quality on international forums.
About Solitude Flame Private Limited
Solitude Flame Private Limited (SOL) is a private limited company incorporated under the provision of the Companies Act, 2013 and having its registered office in Gurgaon, India. SOL has presence in the following countries: India, United States of America (USA), Canada and Europe.
Quick Fundamental Analysis of NTC Industries Limited
| Market Cap | ₹ 146 Cr. |
| Current Price | ₹ 122 |
| 52-wk High | ₹ 139 |
| 52-wk Low | ₹ 67 |
| Stock P/E | 31.1 |
| Book Value | ₹ 81.5 |
| Dividend | 0.00 % |
| ROCE | 10 % |
| ROE | 7.35 % |
| Face Value | ₹ 10.0 |
| EPS | ₹ 5.47 |
| Debt | ₹ 6.33 Cr. |
Profit and Loss Statement NTC
| Mar-19 | Mar-20 | Mar-21 | Mar-22 | Mar-23 | TTM | |
| Sales + | 21.73 | 21.27 | 28.79 | 31.19 | 49.42 | 39.76 |
| Expenses + | 16.89 | 19.92 | 18.51 | 23.12 | 41.13 | 30.92 |
| Operating Profit | 4.84 | 1.35 | 10.28 | 8.07 | 8.29 | 8.84 |
| OPM % | 22.27% | 6.35% | 35.71% | 25.87% | 16.77% | 22.23% |
| Other Income + | 9.94 | 7.46 | 4.4 | 5.84 | 3 | 6.91 |
| Interest | 1.79 | 1.3 | 0.73 | 0.29 | 0.46 | 0.44 |
| Depreciation | 1.89 | 1.92 | 1.91 | 2.04 | 2.04 | 5.78 |
| Profit before tax | 11.1 | 5.59 | 12.04 | 11.58 | 8.79 | 9.53 |
| Tax % | 22.43% | 21.29% | 33.31% | 22.28% | 27.99% | |
| Net Profit + | 8.62 | 4.41 | 8.04 | 9.01 | 6.32 | 6.53 |
| EPS in Rs | 7.98 | 4.08 | 6.73 | 7.54 | 5.29 | 5.46 |
Shareholding Pattern NTC
| Dec-22 | Mar-23 | Jun-23 | Sep-23 | Dec-23 | |
| Promoters + | 65.90% | 65.90% | 65.90% | 65.90% | 65.90% |
| FIIs + | 0.02% | 0.02% | 0.02% | 0.02% | 0.02% |
| DIIs + | 0.02% | 0.02% | 0.02% | 0.02% | 0.02% |
| Public + | 34.07% | 34.08% | 34.07% | 34.08% | 34.06% |
| No. of Shareholders | 7,410 | 7,334 | 7,350 | 7,874 | 8,065 |
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