Shares of Eveready Industries (EIIL) India, on Friday, zoomed 20 per cent to hit an over two-year high of Rs 311.70 on the BSE in intra-day trade in an otherwise weak market. The stock of the dry cell battery maker was trading at its highest level since April 2018.
The trading volumes on the counter jumped over 10-fold with a combined around 5.2 million equity shares, representing 7.1 per cent of total equity of Eveready Industries, changing hands on the NSE and BSE. In comparison, the S&P BSE Sensex was down 3.1 per cent at 49,452 points at 02:21 pm.
The Burman family, the single-largest investor in EIIL with a 20 per cent stake, may become joint promoters of the battery maker along with the Khaitan family, the Mint reported quoting two people familiar with the talks between the two groups.
The Burman family, which promotes Dabur India, increased its stake in EIIL by around 8.8 per cent in 14 July 2020 to 19.8 per cent, becoming the largest shareholder of EIIL. Furthermore, the stake of EIIL’s current promoter, the Khaitan family, and promoter group firms dropped to around 5 per cent as on December 2020, from 23 per cent in March 2020 and 44 per cent in March 2019.
Last month, India Ratings and Research (Ind-Ra) had upgraded EIIL’s long-term issuer rating with positive outlook. The Positive Outlook reflects Ind-Ra’s expectations of a further improvement in the business profile and the liquidity position over FY22 aided by the sustained performance of the batteries and flashlight segments, the likely improvement in the performance of the lighting and appliance segments, a possible resolution of the contingent liability issue and the possibility of a managerial/board representation by the Burman family, the largest shareholder of EIIL.
Meanwhile, EIIL had reported strong operational performance in October-December quarter (Q3FY21) with earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved to 20.1 per cent from 11.4 per cent in Q3FY20.
The higher margins due to a better turnover mix towards the more profitable segments of batteries and flashlights. This coupled with lower distribution cost, lower promotional spends and lower overheads as the various establishments of the Company continued to be run in a restricted manner in the COVID environment, enhanced profitability, the company said. Given the outlook, the Company Is expected to maintain high operating margins in the forthcoming quarters.