Bombay Dyeing board approves land deal greater than m-cap, stock zooms 20%
On September 14, the share price of Bombay Dyeing and Manufacturing Company experienced a significant surge of 20 percent, reaching a 52-week high at Rs 168.50 during early trading hours. This notable increase in share value was driven by the company board’s approval of a strategic move to sell a sizable land parcel spanning 22 acres in Worli, Mumbai.
The deal’s estimated worth amounts to a substantial Rs 5,200 crore, surpassing Bombay Dyeing’s market capitalization of Rs 2,900 crore as of September 13, when the deal was initially announced. Analysts are of the opinion that the company may utilize the proceeds from this land sale to address and reduce its existing debt burden.
Currently, the Bombay Dyeing group carries a total debt load of Rs 3,969 crore. The decision to sell this land parcel is viewed as a strategic financial move that could not only significantly reduce the group’s debt but also enhance its financial stability and flexibility.
This development underscores the company’s commitment to optimizing its assets and strengthening its financial position, potentially paving the way for further growth and investment opportunities in the future.
The board of directors of Bombay Dyeing and Manufacturing Company has given its approval for a significant real estate transaction. The company intends to sell a land parcel spanning approximately 22 acres in Worli, Mumbai, along with the associated Floor Space Index (FSI). The buyer in this transaction is Goisu Realty Private Limited, which is a subsidiary of Sumitomo Realty & Development Company Limited.
This transaction is planned to take place in two phases, with a total consideration of approximately Rs 5,200 crore, subject to approval by the company’s shareholders. Once the shareholders grant their approval, the company will receive about Rs 4,675 crore from the buyer for Phase-I. The remaining balance of about Rs 525 crore will be received upon the fulfillment of specific conditions by the company and the execution and completion of the definitive agreements for Phase-II.
This strategic sale of real estate assets represents a substantial financial move for Bombay Dyeing and Manufacturing Company, providing a significant inflow of funds that can be used to address debt obligations, pursue growth initiatives, or strengthen the company’s financial position. It also reflects the company’s proactive approach to optimizing its asset portfolio and maximizing shareholder value.
Upon the successful conclusion of the proposed transaction, Bombay Dyeing and Manufacturing Company anticipates a series of significant financial and operational advantages. According to the company’s statement, this includes the ability to record a pre-tax profit exceeding Rs 4,300 crore as a result of the transaction, marking a substantial boost to the company’s financial performance.
Additionally, the company expects to achieve a strong positive net worth, indicating improved overall financial stability and solvency. Furthermore, the proceeds from the transaction will enable the complete elimination of all borrowings, relieving the company from interest costs and fortifying its financial position. Importantly, the transaction will also result in the release of encumbrances on assets, offering greater operational flexibility.
The board of directors of Bombay Dyeing and Manufacturing Company had previously outlined a strategic plan in March 2022 aimed at reshaping the company’s trajectory. This strategy emphasized the real estate business as a catalyst for future growth and profitability. Key elements of this plan included expediting the sale of flats in Island City Centre (ICC), Dadar, and capitalizing on land banks, among other strategic measures. The successful execution of this land sale transaction aligns with the company’s strategic goals and signifies a pivotal step in its transformation, reinforcing its commitment to achieving enhanced financial strength and profitability.
In a significant development, a total of 35 lakh shares, equivalent to 1.7 percent of Bombay Dyeing’s equity and valued at Rs 58.6 crore, changed hands in a block deal window, as reported by CNBC-TV18. This transaction reflects notable investor interest and activity surrounding the company’s shares following the announcement of its strategic initiatives.
In addition to the land sale transaction, the company’s board has given in-principle approval for the development of previously unused land parcels owned by the company. These parcels have the potential to accommodate approximately 3.5 million square feet of residential and commercial properties, with an estimated revenue generation of about Rs 15,000 crore over the coming years. This development aligns with the company’s commitment to leveraging its real estate assets for future growth and profitability.
Furthermore, Bombay Dyeing intends to explore various joint development and partnership opportunities as part of its strategy to create a consistent pipeline of future revenue and profits.
It’s worth noting that the company reported consolidated losses that widened to Rs 119.8 crore in the quarter ending in 2023, compared to Rs 76.8 crore in the corresponding period of the previous year. Additionally, its revenue experienced a year-on-year decline of 17.87 percent, amounting to Rs 498 crore. These financial results underscore the significance of the strategic initiatives taken by the company to optimize its assets and enhance its financial outlook.
Investor enthusiasm and positive sentiment are not limited to Bombay Dyeing and Manufacturing Company alone within the Wadia Group. Other companies under the Wadia Group umbrella are also experiencing buying interest and gains in their stock prices.
Britannia Industries, a prominent entity within the group, has seen a modest increase of 0.21 percent in its stock, trading at Rs 4,618. This suggests that investors are displaying confidence in the company’s prospects.
National Peroxide, another key player in the group, has witnessed substantial gains, with its stock price surging to Rs 2,051.10, marking an impressive increase of Rs 126.90, or 6.59 percent on the BSE. This surge reflects strong investor enthusiasm for the company’s performance and potential.
Remarkably, Bombay Burmah Trading Corporation, part of the Wadia Group, reached a 52-week high at Rs 1,375.70 and was trading at Rs 1,291.95, showing a substantial gain of Rs 87.55, equivalent to 7.27 percent on the BSE. This significant performance underscores the overall positive sentiment and robust investor interest that extends to various companies within the Wadia Group.
These collective gains and heightened trading activity across multiple entities within the group indicate a broader optimism about the group’s activities, strategic moves, and future growth prospects, including the recent land sale transaction by Bombay Dyeing and Manufacturing Company.
