Carborundum Universal stock price jumps 6% after multiple acquisitions

4 minutes of reading Last update: Sep 17, 2024 | 11:30 AM IST

Carborundum Universal shares in the spotlight: Carborundum Universal shares rose 5.89 per cent to touch an intraday high of Rs 1,558.20 per share on September 17, 2024.

The rise in the share price comes after Carborundum Universal revealed that it has entered into a share purchase agreement to acquire 100% stake in Silicon Carbide Products (SCP), Inc., USA. The total value of the acquisition is Rs 56 crore.

In a stock exchange filing, the company said: “We are pleased to announce that the Company has today entered into a purchase agreement with Silicon Carbide Products Inc. (“SCP Inc”), Joshua J. Dahlman and Rick L. Cleveland (current “stockholders” of SCP Inc) to acquire 100% of the shares of SCP Inc through a Class F reorganization under Section 368(a)(1)(F) of the Internal Revenue Code. For purposes of this acquisition, the Company would form a wholly owned U.S. subsidiary to serve as the SPV for the acquisition.”

Silicon Carbide Products (SCP) specializes in the production of high-quality Nitride Bonded Silicon Carbide (NBSiC) products that are known for their excellent wear and thermal shock resistance. With over 30 years of experience, SCP provides customized solutions to a variety of industries including power generation, mining, materials handling, non-ferrous molten metal transfer, and petrochemical refineries.

In a separate agreement, Carborundum Universal also entered into a Share and Shareholder Subscription Agreement with Amplus Energy Solutions PTE Limited (Singapore) and Grian Energy Private Limited (GEPL).

The company will invest Rs 80 million in GEPL, acquiring a 4.19 percent stake in the share capital of the company, the company said.

This investment will enable Carborundum Universal to access approximately 10 MW of contracted capacity from GEPL’s Captive Power Plant. In addition, Carborundum Universal has signed a Power Purchase Agreement with GEPL to purchase electricity generated by the plant for its own needs.

Carborundum Universal Ltd, part of the Chennai-based Murugappa Group, is a major player in the manufacturing of abrasives, ceramics, refractories and electro-minerals. The company operates in several business segments, each catering to different industrial needs.

In the abrasives segment, Carborundum Universal Ltd manufactures a wide range of rigid and flexible abrasives. Key products include bonded abrasives, coated abrasives, metalworking fluids and super abrasives. With a dominant market share of over 30% in the bonded abrasives market, the company is a leading force in the Indian abrasives industry.

The Industrial Ceramics division offers advanced ceramics such as alumina, zirconia, zirconia reinforced alumina and silicon carbide. These products serve a variety of industries, including power generation and distribution, mining and ore processing, cement, ferrous metals, automotive, battery manufacturing, glass, paper, food grain processing, petrochemicals and ceramic tiles.

The company’s production network includes ten production plants in India, Russia and Thailand.

More recently, Carborundum Universal Ltd has expanded its product offering to include innovative abrasives (such as cylindrical wheels, resin bond face grinding and film backed discs), composite materials (including CFRP drone tubes and copper shaft liners) and ceramics (with products such as CUMITHERM-Z, tape cast alumina ceramics and sputter coated products).

These new products are targeted at industries such as automotive, automotive components, engineering, metals, infrastructure, energy, power and housing.

With a strong global presence, the company has marketing operations in North America, the Middle East and China and distributors in over 55 markets worldwide.

At 11:20 am, the company’s shares were trading 3.84 per cent higher at Rs 1,527.90 per share. In comparison, the BSE Sensex was trading marginally higher at Rs 83,021.77.

First published: Sep 17, 2024 | 11:27 AM IST