Details of the Multi-Tranche Fund Raise
The board has greenlit a multi-tranche fund raise involving 61.28 crore equity shares and 8 crore convertible warrants, all priced at ₹5 per unit, comprising a face value of ₹1 and a premium of ₹4. The first tranche of 28 crore shares aims to raise ₹140 crore from promoters and select investors for cash. The second tranche of 33.28 crore shares, worth ₹166.40 crore, is designated for a share swap with Mr.
Jagjit Gouri to acquire a 21.62% direct stake in Automech Group. Additionally, 8 crore warrants will be issued to promoter Mr. Naresh Kumar Bansal to raise ₹40 crore, with a conversion window of 18 months.
Strategic Acquisition of Automech Group
Rama Steel Tubes, alongside its subsidiary RST International Trading FZE, is executing a 100% acquisition of Automech Group Holding Limited for an aggregate consideration of AED 296 million. This strategic move provides the company entry into diversified UAE sectors, including steel fabrication, precision engineering, and marine services. By integrating Automech’s eight subsidiaries, Rama Steel intends to achieve operational synergies and geographical expansion across the Middle East.
The acquisition completion date has been formally extended to December 15, 2026, under an amended Share Purchase Agreement to finalize the transfer of ownership.
Financial and Industry Context
Rama Steel Tubes operates in the Iron and Steel Products industry, specializing in ERW steel tubes. The company reported TTM revenue of ₹1,079.32 crore but faces a challenging profitability environment, with a TTM P/E of 56.79 compared to the industry average of 34.79. While annual revenue showed a 7.28% growth, net profit declined by 44.71% in the last fiscal year.
This fund raise represents a significant capital event relative to the company's current market capitalization of ₹736.22 crore, signaling a shift toward international market consolidation to offset domestic margin pressures and stabilize its long-term revenue streams.
Proposed Capital Structure Changes
- Increase in Authorised Share Capital from ₹200 crore to ₹250 crore
- Total dilution through 61.28 crore new equity shares and 8 crore warrants
- Promoter Naresh Kumar Bansal's holding projected to rise to 18.88% post-conversion
- Introduction of Jagjit Gouri as a significant shareholder with a 14.29% stake via share swap
- Issuance price of ₹5 per share determined in accordance with SEBI ICDR Regulations
