Hello Sir,
Hope you are doing well.
I was recently reading about Kiri Industries.
It’s a Rs 2,000 crore market cap company and what’s interesting is that it is likely to receive Rs 5,000 crore from sale proceeds of Dystar.
Basically, Kiri, a minority shareholder in Dystar, initiated a legal battle in 2015 against Senda, Dystar’s majority shareholder, accusing it of minority oppression through various actions in Singapore High Court.
On March 3, 2023, the SICC delivered the final valuation of Kiri’s stake in joint venture company DyStar at USD 603.8 million.
Below, we have shared our notes from the Q1 FY 25 to understand the details of the case better.
Before that, on 4th August, we recommended a Cement stock to Alpha and Alpha + Members
- It’s a well managed Cement company and available at Rs 330-340 cr. per MTPA against replacement cost of ~ Rs 850 cr. per MTPA
- As per ET report, cement industry is going through a phase of consolidation and smaller cement cos. are getting acquired in Rs 700-900 cr. per MTPA range
Update: As on 10th Sep’24, 22 medium/long term stock recommendations are under coverage. Out of the same, 6 are both Positive rated and in the buy zone.
You can get the detailed report on the latest Cement stock and other recommendations by signing up HERE
Kiri Industries – Notes from Q1 FY 25 concall
– DyStar Sale Proceedings:
- The SICC judgment on May 20, 2024, ordered the en bloc sale of DyStar, without a reserve price, to be completed by December 31, 2025. Kiri will receive $603.8 million in priority, with remaining proceeds to go to Senda
- Appeals:
- Kiri’s appeal is against the non-award of interest, while Senda’s appeal is about priority payments
- The appeals and objections will be filed by August 29, and the hearings will take place in October or November
- The sale process is moving efficiently, with the information memorandum expected to be launched soon
- Deloitte has been working with 70+ prospective bidders, including private equity and finance investors
- The non-binding offers will be invited first, with binding offers to follow, and the process should complete between March and June 2025
– DyStar Performance:
- DyStar’s EBITDA for the first two quarters of FY25 is around $55 million each, with a projected annual EBITDA of $100-$110 million
- The EBITDA includes management fees paid to Senda and Longsheng and their usual extraction of money from DyStar
- DyStar’s EBITDA margin is over 15%
- DyStar’s cash reserves stood at $570 million, and its net current assets are worth $850 million (equivalent to one year’s sales)
– Next Phase of Investment (Copper & Fertilizer):
- Kiri plans to diversify beyond dyes into renewable energy, EV sectors, infrastructure, and fertilizer
- The investment will be done in phases:
- Phase 1 involves an investment of Rs 2,400 crores, focused on producing copper rods, cathodes, and coils with a production capacity of 200,000 tons
- Phase 2 will involve a further investment of Rs 4,000 to Rs 5,000 crores, increasing production to 300,000 tons of copper and 900,000 tons of fertilizer
- The total revenue from both phases is expected to be Rs 40,000 crores, with projected profits of Rs 3,000 crores after tax.
(End)
Disclaimer: This is not a recommendation to buy/sell Kiri Industries. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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