EuroGroup enters Indian market | Acquires 40% stake in Kumar Precision Stampings • EVreporter

On August 1, 2024, EuroGroup Laminations S.p.A. (EuroGroup) announced an agreement to acquire a 40% stake in Kumar Precision Stampings Private Limited (Kumar) for a total investment of Euro 19.9 million. Kumar, based in New Delhi, produces and distributes stators and rotors for electric motors and magnetic laminations for transformers, serving sectors including HVAC, railway, home appliances, pumps, and generators.

The acquisition aims to expand EuroGroup’s global presence with a focus on the Indian market and transformer sector. It will utilize Kumar’s manufacturing base to boost competitiveness and explore new market segments. The investment is expected to enhance Kumar’s export capabilities and accelerate growth through EuroGroup’s sales network, R&D resources, and best practices. Additional benefits include cost synergies raw material purchasing, working capital optimization, and improved efficiency in capital expenditure and R&D spending. The move supports EuroGroup’s goals of market enhancement and stakeholder value.

EuroGroup will acquire a 40% stake in Kumar by investing a total of Euro 19.9 million. This includes Euro 13.9 million for purchasing existing shares and Euro 6.0 million for a capital increase. The transaction values Kumar at a pre-money equity of Euro 43.8 million and an enterprise value of approximately Euro 58.3 million. The valuation considers a projected revenue CAGR of about 21% for the period 2022A-25E and estimates product revenues of Euro 54 million for the year ending March 2025, with an expected EBITDA margin of 9.5%-10.5%.

For the fiscal year ending March 31, 2024, Kumar reported product revenues of approximately Euro 40 million and an EBITDA of about Euro 3.6 million. Kumar operates from four production facilities, one of which is nearing completion, and has over 40 years of experience in the industry.

A shareholders’ agreement will be signed to establish Kumar’s governance post-transaction, allowing EuroGroup to appoint a majority of the Board of Directors. The transaction is anticipated to close by the end of the financial year 2024, funded through EuroGroup’s available cash. The deal will be discussed during the conference call for 1H2024 financial results on Friday, August 2, 2024, at 11:00 am CEST.

Marco Arduini, CEO of EGLA, commented: “This acquisition represents a very significant and strategic step in the development path of EGLA. Our entry into the Indian market, which is currently among the countries with the highest long-term growth expectations, will allow us to broaden our international footprint and further strengthen our competitive edge in our reference sector, while seizing growth opportunities and operational synergies in a fast-expanding market. We believe that the partnership with Kumar will be yet another major lever in the acceleration of EGLA’s growth path, and that it will benefit all stakeholders.”

Anil Kumar Gupta, Co-Founder & MD of Kumar, commented: “This strategic partnership unites our deep-rooted Indian market presence and cost efficiency with EGLA’s world-class manufacturing prowess, technical know-how and global footprint. By combining our complementary strengths and shared values, we will further strengthen our competitive edge and growth in India, while accelerating our joint expansion abroad. We are thrilled to embark on this exciting new journey together.”

EGLA’s advisors included Mediobanca as financial advisor, Freshfields Bruckhaus Deringer for legal matters, and Shardul Amarchand Mangaldas & Co. for Indian law.

Also read: Types of motors used in electric vehicles and future trends