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Elgi Equipments gains after US arm inks deal to buy into CS Industrial Services

Brokerage firm ICICIdirect has a "Buy" rating for the stock with a target price of Rs 500.

March 13, 2023 / 10:19 AM IST

Shares of Elgi Equipments nudged higher on March 13 after the company announced that its wholly owned US subsidiary Elgi Compressors USA Inc entered into an operating agreement to pick up 33.33 percent in CS Industrial Services LLC, a North Carolina limited liability company.

At 10.02am, shares of Elgi Euipments were trading at Rs 489 on the National Stock Exchange (NSE), up 4.26 percent, after touching an intraday high of Rs 494.

Three lakh shares of the company changed hands on the exchanges, as against the one-week daily traded average of one lakh shares.

CS Industrial Services is yet to commence business operations, hence, the subsidiary will acquire Class A shares of the company for $ 100,000 and Class B shares at a total of $25,000.

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Class A shares typically come with more voting rights than Class B shares. Under the agreement, the acquisition will make CS Industrial Services the exclusive dealer and distributor of Elgi-branded compressors in the Western New York region.

Brokerage firm ICICIdirect also expects the company's expansion in new international markets to drive its long-term incremental growth as rest of the world contributed nearly 50 percent of its revenue in FY22.

The brokerage had also upgraded its rating for the stock to 'buy' with a target price of Rs 500 in February on the back of its long term positive outlook.

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first published: Mar 13, 2023 10:19 am