Butterfly Gandhimathi hits record high on open offer by Crompton Greaves

Shares of Crompton Greaves Consumer Electricals also rallied 5 per cent to Rs 396.35 on the BSE in intra-day trade

Shares of Butterfly Gandhimathi Appliances (Butterfly) hit a record high of Rs 1,419, up 2 per cent on the BSE in Wednesday’s intra-day trade, after Crompton Greaves Consumer Electricals (Crompton) made an open offer to acquire 26 per cent equity stake (4.65 million shares) of the company at Rs 1,433.90 per share. Post acquisition, Crompton will hold up to 55 per cent stake in the company.

The stock of Butterfly, which is engaged in household appliances business, surpassed its previous high of Rs 1,399.15 touched on February 11, 2022. In the past three months, it outperformed the market by zooming 60 per cent as compared to 2 per cent decline in the S&P BSE Sensex.

Meanwhile, shares of Crompton rallied 5 per cent to Rs 396.35 on the BSE in the intra-day trade. It had hit a 52-week high of Rs 512.05 on September 16, 2021. In comparison, the S&P BSE Sensex was up 0.46 per cent at 57,563 levels at 09:45 AM.

"Crompton has signed definitive agreements on February 22, 2022 with certain members of the promoter group of Butterfly to acquire upto 55 per cent stake at Rs 1,403.00 per equity share, aggregating upto Rs 1,379.68 crore, and certain Butterfly trademarks in allied and cognate classes from promoter group entities for a consideration of Rs 30.38 crore," Crompton said in an exchange filing. READ HERE

The transaction will be subject to completion of customary closing conditions. The transaction is expected to be financed through a mix of internal accruals and debt, the company said.

The transaction will accelerate Crompton's long-term strategic goal of becoming a leading player in the small domestic appliances segment. Butterfly's complementary product portfolio, coupled with scale and channel synergies, will drive robust revenue growth and profitability, Crompton’s management said.

Butterfly's leading kitchen and small domestic appliances portfolio includes Mixer Grinders, Table Top Wet Grinders, Pressure Cookers, Stainless Steel Vacuum Flasks, LPG Stoves and Non-Stick Cookware.

Technical View
Upside Potential: 5.5%
Support: Rs 1,330

Butterfly Gandhimathi Appliances has been trading on a secular uptrend since its breakout on the the weekly charts in August 2020. The stock has since then gained a whopping 1026 per cent (11.3-fold) in the following 19 months.

The stock continues to trade with a bullish bias, and can test Rs 1,450 in the near-term, with the possibility of rallying up to Rs 1,500, thus indicating further upside of 5.5 per cent from the current levels. The near term support for the stock can be expected around Rs 1,330-odd levels, while the short-term uptrend is likely to remain intact as long as the stock sustains above Rs 1,220-odd levels.

(With inputs from Rex Cano)