Eveready falls 7% after Burman Family makes an open offer to buy 26% shares

Shares of Eveready Industries slumped 7 per cent to Rs 350 on the BSE in Wednesday’s intra-day trade after the Burman family – promoters of Dabur India – announced an open offer for acquiring 26 per cent stake in battery maker. The stock has fallen 8 per cent from its intra-day high of Rs 380.50 on the BSE.

The open offer has been priced at Rs 320 per share aggregating to a total consideration of up to Rs 605 crore. The stock ended at Rs 376.35 on the BSE on Monday.

In a letter to the board of Eveready, the Burman Group informed that it intends to acquire control and requested appropriate representation on the board through appointing three directors, each of whom would be a non-executive director.

The Burman Group also said that it had placed an order with its stock broker, J M Financial Services on February 28 to purchase up to 3.82 million shares or approximately 5.26 per cent holding in Eveready, triggering the open offer.

Puran Associates Private Limited, VIC Enterprises Private Limited, M.B. Finmart Private Limited, Gyan Enterprises Private Limited and Chowdry Associates (together the “Burman Group”) are exiting public shareholders in Eveready Industries holding approximately 19.84 per cent stake.

Meanwhile, in the past 17 trading days, the stock of Eveready has rallied 37 per cent on expectation of strong performance in the next financial year 2022-23 (FY23).

The company, while announcing December quarter (Q3FY22) results on February 4, 2022, said the battery category will revert to its earlier level of profitability now that all adverse costs have been passed on. Similarly, the flashlights category will be on a stronger pitch with augmentation of its range with competitive products. The lighting and electrical category will commence its growth trajectory in a profitable way as the range and supply chain has been made efficient.

“With the above, the Company is expected to turn in stronger performance within a short period of time. However, these benefits may not quite accrue within Quarter 4 and the performance during the quarter is likely to be subdued prior to transition to a stronger next fiscal,” Eveready Industries said in an outlook.

Meanwhile, in Q3FY22, the company’s net profit more-than-halved or was down 53 per cent year-on-year (YoY) at Rs 23.71 crore due to weak operational performance. Operating revenue declined 4 per cent YoY at Rs 326 crore, while operating earnings before interest tax and depreciation and amortization (EBITDA) contracted 8 percentage points at 36 per cent.

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