This auto stock zoomed 54% in 2 weeks on 5 mn warrants issue to Vijay Kedia

Shares of Atul Auto continued its northward movement and surged 12 per cent to hit 52-week high of Rs 289.55 apiece in Friday’s intra-day trade. The stock of commercial vehicles company surpassed its previous high of Rs 270, which it had touched on November 4, 2021.

In the past two weeks, the stock zoomed 54 per cent after the board approved preferential issue of Rs 115 crore worth of warrants to promoters and non-promoters of the company, including investor Vijay Kishanlal Kedia.

“The board approved to issue up to 5.81 million warrants at Rs 198 per share each convertible into one equity share of the company within a maximum period of 18 months from date of allotment. The company will allot 5.05 million warrants to Vijay Kishanlal Kedia, and a total 757,575 warrant to promoters, Khushbu Auto Private Limited (656,565 warrants) and Jayantibhai Jagjivanbhai Chandra (101,010 warrants),” Atul Auto said in an exchange filing.

As on June 30, 2022, Kedia Securities Private Limited held 1.47 per cent stake in Atul Auto, the shareholding pattern data shows.

Analysts believe that the huge fund raise could be utilised for contract manufacturing of electric 3-W player domestically. Moreover, the launch of company's electric auto is a key monitorable, said analysts.

"With a market capitalisation of Rs 470 crore and 22 million shares outstanding, this is a significant capital raise resulting in 25 per cent plus dilution. With marquee investor again coming in with a substantial stake (around 18 per cent stake), it remains to be seen as to what are the long term growth opportunities at the company as its base business is on a slower than anticipated recovery path," brokerage firm ICICI Securities said in a note.

Atul Auto is a prominent 3-wheeler (3W) manufacturer based out of Gujarat with broad-based presence across segments and fuel types. The company has been analysing macro-economic challenges in the country, specifically concerning the supply and demand, and taking steps to align the business to overcome risk and grab available opportunity. The company also aims to tap opportunity lying in 3-W electric vehicles (EV) segment across the globe.

"The company has tested and homologated model of 3W EV L5 category with fixed Lithium-ion Battery Packs, with estimates launch timeline in this fiscal year (FY23). Further, Atul Greentech Private Limited (AGPL) has tied-up with Honda Power Pack Energy India and Valeo to develop the prototype cargo and passenger 3-W with the most reliable Honda Mobile Power Pack e: Swap & Valeo powertrain system. This is considered as a remarkable step towards providing swappable battery solution in 3-W segment," Atul Auto.