Bombay Dyeing board approves land deal greater than m-cap, stock zooms 20%

On completion of the proposed transaction, the company will be able to record a pre-tax profit in excess of Rs 4,300 crore on account of this transaction.

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Bombay Dyeing and Manufacturing Company share price rose 20 percent to touch 52-week high of Rs 168.50 in the early trade on September 14 after the company board approved to sell 22 acres of land parcel situated at Worli, Mumbai. The deal value worth Rs 5,200 crore is greater than Bombay Dyeing's closing market cap of Rs 2,900 crore on September 13, when the deal was announced. Analysts believe the company may look to reduce debt with the proceeds from the deal. The group's debt that currently stands at Rs 3,969 crore.

The board of directors of the company approved the proposal to sell the land parcel of about 22 acres (along with the associated FSI) in Worli, Mumbai to Goisu Realty Private Limited (a subsidiary of Sumitomo Realty & Development Company Limited) in 2 phases, for a total consideration of about Rs 5,200 crore, subject to approval of its shareholders.

Post shareholders’ approval the company will receive about Rs 4,675 crore from the buyer for Phase-I and balance amount of about Rs 525 crore upon completion of certain conditions by the company and execution & consummation of the definitive agreements thereto for Phase- II.

The board decided to convene an extra-ordinary general meeting (EGM) of the members of the company and a notice for the same will be circulated in due course. The agreement for sale (phase I) is expected to be entered on or before September 30, 2023 and for phase II by Q423-24.

The financials

On completion of the proposed transaction, the company will be able to record a pre-tax profit in excess of Rs 4,300 crore on account of this transaction, report a strong positive net worth, extinguish all of its borrowings, thereby saving on interest costs, and release the charge on encumbered assets, the company said in the statement.

The board of Directors of BDMC had charted out a strategy in March 2022 to change the company’s trajectory by focusing on the realty business for future growth and profitability, accelerating the sale of flats in Island City Centre (ICC), Dadar, monetising land banks, and more, the company added.

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There were 35 lakh shares (1.7 percent equity) worth Rs 58.6 crore of Bombay Dyeing change hands in block deal window, reported CNBC-TV18.

The board has also, in-principle, approved the development of the unutilised land parcels available with the company having a potential to create about 3.5 million square feet of residential / commercial property and generate a revenue of about Rs 15,000 crore over the next few years.

The company will also evaluate other joint development and partnership opportunities to create a steady pipeline of future revenue and profits.

Company's consolidated losses widened to Rs 119.8 crore in the quarter ended 2023 from Rs 76.8 crore in the year-ago period. Its revenue declined 17.87 percent YoY to Rs 498 crore.

The other Wadia group stocks are also witnessing buying interest, inlcuding Britannia Industries, rising 0.21 percent at Rs 4,618, and National Peroxide was quoting at Rs 2,051.10, up Rs 126.90, or 6.59 percent on the BSE.

Bombay Burmah Trading Corporation touched a 52-week high of Rs 1,375.70 and was trading at Rs 1,291.95, up Rs 87.55, or 7.27 percent on the BSE.