V-Guard acquires Sunflame. Attractive pricing.

V-Guard Industries is acquiring 100% shareholding of Sunflame Enterprises Private Limited (SEPL).

SEPL through its brands ‘Sunflame’ and ‘Superflame’, is one of the leading players in the kitchen appliances space in India. The Company offers a wide product portfolio including cooktops, chimneys, pressure cooker, mixer grinder and small kitchen appliances.

  • Consideration value for 100% stake acqusition is Rs 660 crore (on a cash-free, debt-free basis)
  • SEPL revenue track –
    • FY 20 – Rs 262 cr
    • FY 21 – Rs 264 cr
    • FY 22 – Rs 350 cr
  • In FY 22, it had reported PBT of Rs 44 cr and PAT of Rs 33 cr

Based on the reported financials, the transaction is valued at 1.9x of trailing revenues and 20x of trailing profits. This is very attrative given the strength of the Sunflame brand. It seems, the existing promoters of SEPL were keen on cashing out.

V-guard itself is currently valued at 46x of trailing profits and hence the SEPL’s acqusition shoule be value accretive.

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