JK Tyre stock gainer on merger with Cavendish Industries

JK Tyre stock has rallied 12 percent so far this year, underperforming Nifty's returns of 16 percent.

Shares of JK Tyre gained on September 17 as the company's board on Monday approved the merger of Cavendish Industries into the company for operational efficiencies, and the amalgamation will result in a share transfer. Shareholders will get 92 shares of JK Tyre for every 100 shares of Cavendish held, the said the company.

The amalgamation will result in operational synergies, reduce cost, consolidate sales and distribution network, and enhance shareholder value, said JK Tyre in a regulatory filing. Both the companies are engaged in a similar line of business, it said, adding that amalgamation will result in all the related businesses being housed under one listed company.

After the scheme, there is a slight change in the shareholding pattern, with promoter stake slightly falling to 49.31 percent. JK Tyre & Industries had acquired Cavendish Industries, a Kesoram Industries unit, for Rs 2,195 crore, to enhance its position in the truck and bus radial segment.

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The company recently allotted 1.33 crore equity shares of face value Rs 2 each on conversion of 24,000 fully paid Compulsorily Convertible Debentures (CCDs) of face value Rs 1 lakh each, issued to International Finance Corporation, a Qualified Institutional Buyer.

These CCDs, carrying an interest rate of 6 percent per annum compounded quarterly, were converted at Rs 180.50 per equity share through a preferential issue on a private placement basis.

Following the conversion of CCDs into equity shares, the company's total equity share capital has increased from 26.07 crore shares to 27.40 crore shares, with each share having a face value of Rs 2, all fully paid-up.

JY Tyre share price fell marginally to Rs 442.60 on NSE in the previous session. The stock has rallied 12 percent so far this year, underperforming Nifty's returns of 16 percent. In the past 12 months, the counter has zoomed 73 percent. In comparison, Nifty rose 26 percent during this period.

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