Sona BLW Precision Forgings (Sona) has entered into an agreement to acquire the Railway Equipment Division (RED) of Escorts Kubota (Escorts).
- RED of Escorts is a leading supplier of critical components for Railways, such as brakes and suspension systems for various rolling stocks.
- The division reported revenues of Rs 950 cr in FY 24. In previous 2 years, the revenues were Rs 842 cr and Rs 636 cr.
- EBIT of the division in FY 24 was Rs 179 cr.
- The transaction is being carried out for a lump sum cash consideration of Rs 1,600 cr.
Commenting on the acquisition, Vivek Vikram Singh, MD & Group CEO of Sona Comstar, said: “Once completed, the RED acquisition will enhance our clean mobility product offerings by adding a market-leading railway components business.”
Escorts has gone for the transaction to consolidate and put greater focus on the Agri and Construction equipment business.
Buy valuations are attractive and it does seem like a good pick by Sona.