Apollo Pipes acquires majority stake in Kisan Mouldings for Rs 118 crore

Apollo Pipes Ltd, a prominent player in the Indian piping industry, has recently announced the acquisition of a majority controlling stake in Kisan Mouldings (KML), marking a significant milestone for both companies. This strategic move is set to reshape the landscape of the Indian Plastic Pipes Industry and drive unprecedented growth.

The Acquisition Deal

Apollo Pipes secured its position in KML through preferential issue allotment of 6.40 crore equity shares at an issue price of Rs 18.50 per share, amounting to a total investment of Rs 118.40 crore. This acquisition is expected to redefine standards and unlock synergistic benefits for both companies.

Strategic Investment

The acquisition aligns with Apollo’s strategy to strengthen its position as a premier manufacturer in the Plastic Pipe Industry in India. By integrating KML into its portfolio, Apollo aims to expand its legacy and penetrate new end-user segments, leveraging KML’s extensive range of high-quality products.

Product Portfolio and Market Expansion

KML brings a wide range of SKUs, including Plastic Pipes and fittings for building and agricultural purposes, and cost-effective PVC products, catering to diverse preferences and purposes. With over 100 dealers and 10,000 retailers in its network, KML provides a strong foundation for Apollo’s geographical expansion, particularly in the Western and Central regions of India.

Market Potential and Growth Prospects

The Indian Plastic Pipes Industry is poised for remarkable growth, with market estimates projecting a market size of approximately Rs 55,000 crore by FY 2026E. This growth is driven by government initiatives promoting cleanliness and sanitation, affordable housing, and the substitution of metal pipes with polymer pipes.

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“I would like to reiterate that our industry is going through short term pain, but our long term goals remain intact whereby we look forward to achieve revenue growth of 25% to 30% CAGR for the next four years. We are also confident of hitting 25% to 30% of ROCE despite these proposed investments supported by working capital efficiencies.” – Sameer Gupta, Chairman and MD, Apollo Pipes

Leadership Perspective

Sameer Gupta, Chairman & Managing Director of Apollo Pipes, expressed excitement about the acquisition, highlighting the strategic and financial fit between the two companies. He emphasized the significant synergies and market opportunities that this partnership would bring, as well as Apollo’s commitment to innovation and growth in the industry.

Background of Kisan Mouldings

KML, incorporated on November 20, 1989, has a strong track record in the PVC industry, manufacturing PVC pipes, fittings, UV-resistant multi-layer water tanks, and other polymer products. With a turnover of Rs. 272.99 crores in FY 2022-2023, KML brings extensive experience and a wide range of high-quality products to the Apollo umbrella.

The stock price at the National Stock Exchange (NSE) was Rs 653.05 at 11:52 am, reflecting a 1.38% increase.

Conclusion

Apollo Pipes’ acquisition of a majority stake in Kisan Mouldings marks a significant step forward in the Indian Plastic Pipes Industry. The partnership between these two industry giants promises to drive innovation, expand market reach, and deliver high-quality products to meet the evolving needs of customers in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.