Bombay Dyeing & Manufacturing, the flagship company of Wadia Group, witnessed a significant uptick of 20% in its share value during early trade on Thursday, reaching a fresh 52-week high at ₹168.6 apiece. The surge followed the company's strategic decision to sell approximately 22 acres of prime land in Mumbai's Worli area.
In a meeting held on September 13, 2023, the company's board of directors approved the proposal to divest this land parcel in two phases (along with the associated FSI) to Goisu Realty Private Limited, a subsidiary of Sumitomo Realty & Development Company Limited, for a total consideration of approximately ₹5,200 crore, subject to the shareholders' seal of approval.
Upon securing shareholders approval, Bombay Dyeing & Manufacturing will receive a sum of ₹4,675 crore from the buyer as part of Phase I. The remaining balance, amounting to around ₹525 crore, will flow into the company's coffers upon the fulfilment of specific conditions by Bombay Dyeing and the successful execution of definitive agreements for Phase II.
On completion of the proposed transaction, the company anticipates recording a pre-tax profit exceeding ₹4,300 crore. Importantly, it will be able to eliminate all its existing borrowings, thereby curbing interest costs and unshackling encumbered assets, as per company's regulatory filing.
Furthermore, the move opens the door for potential dividend payouts in the future. With a solid treasury balance at its disposal, the company is well-equipped to fund upcoming real estate projects, solidifying its presence and growth trajectory in the real estate sector.
In essence, this land sale isn't merely about settling debts; it's about empowering Bombay Dyeing & Manufacturing to embark on a new phase of growth, financial stability, and profitability, aligning with its strategic goals and cementing its position in the real estate landscape.
Meanwhile, the board also approved the development of the unutilized land parcels available to the company. According to the company, these land parcels will create about 3.5 million square feet of residential and commercial property and generate a revenue of about Rs. 15,000 crore over the next few years.
The Bombay Dyeing and Manufacturing, established on August 23, 1879, is engaged primarily in the business of real estate development, polyester staple fibre, and retail.
The Wadia Group, started in 1736, is among India's oldest conglomerates. It has a diverse portfolio spanning various industries such as FMCG, real estate, textiles, chemicals, and food processing. The group has a long-standing presence and significant expertise in these sectors.
After experiencing a consistent decline from May 2022 to March 2023, resulting in a 46% loss in value, Bombay Dyeing and Manufacturing shares staged a remarkable recovery. In April 2023 alone, it surged by 62.47%, effectively covering the entire 11-month downfall. The shares have rallied 204% to date from their May 2023 lows of ₹53.25.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
