Alicon Castalloy zooms 30% in 2 days as MFs pick stake via QIP issue

Shares of Alicon Castalloy were locked in the 20 per cent upper circuit band, at Rs 761.75, on the BSE on Friday, having zoomed 30 per cent in two trading days, after the company said mutual funds bought nearly 10 per cent stake in the auto parts & equipment firm in qualified institutional placement (QIP) issue.

Alicon Castalloy raised Rs 80 crore by allotment of 1.48 million equity shares to eligible qualified institutional buyers (QIBs) at the issue price of Rs 540 per share, pursuant to the QIP. The QIP opened on June 25, 2021 and closed on June 30, 2021.

As per the shareholding pattern for the period ended June 30, 2021, filed by the company, mutual funds acquired 1.48 million shares, or 9.51 per cent stake, in Alicon Castalloy. The mutual funds held 0.17 per cent holding at the end of March 31, 2021 quarter, data shows.

Axis Mutual Fund Trustee Ltd. A/c Axis Mutual Fund A/c Axis Small Cap Fund (4.75 per cent), Aditya Birla Sunlife Trustee Private Limited A/c Aditya Birla Sun Life Multi Cap Fund (2.62 per cent) and IDFC Emerging Business Fund (2.14 per cent) have bought more than 2 per cent stake each in the firm.

The company proposed to use net proceeds for repayment of debt of the company, and general corporate purposes, or any other purposes.

As Alicon Castalloy's portfolio mainly cater to three business segments (automotive segments; non-automotive segment; and e-mobility), the company is expected to benefit from sustained domestic auto demand driven by new launches, pent up demand and a preference for personal mobility.

Even globally, most of Alicon’s customers have also indicated recovery in demand with the International Operations, through subsidiary Illichman Castalloy, witnessing a strong pick up despite concerns around the second wave in Europe.

According to the company, launches and announcements of electric vehicles (EVs) have increased, leading to an expanding opportunity funnel combined with progress on development programs for OEMs focused on light-weighting. Further, the company is witnessing an intensifying demand pipeline supported by new business wins across auto, EV and non-auto segments, providing healthy growth visibility.

"That said, key risks in the short-term are the price hikes undertaken by OEMs due to rising raw material pressures. Further, the intensity of second wave and consequent local lockdowns around India has impacted footfalls at vehicle showrooms," the company said in an investor presentation.