Ind-Swift Labs Stock Tumbles On API Unit Sale To PI Industries

Shares of Ind-Swift Laboratories Ltd. fell the most at least this year after it sold its active pharmaceuticals ingredients business, the company's only revenue-generating vertical, for raising funds to repay debt.

Ind-Swift will divest the business in a slump sale to agrisciences firm PI Industries Ltd. at an enterprise value of Rs 1,530 crore, according to an exchange filing. The company will turn debt-free after the deal and use the surplus funds for strategic acquisitions and investments, it said. The acquisition is expected to be completed by October.

The API unit clocked a revenue of Rs 856.58 crore for FY21, contributing all of Ind-Swift's consolidated revenue. The business had a net worth Rs 299 crore as of March 31, 2021.

"The acquired business with revenue scale of around Rs 860 crore and Ebitda margin of nearly 23%, access to strong customer franchise, accredited manufacturing facilities and experienced management team will help PI to build a differentiated scale play in pharma in an expeditious manner," PI Industries said in a statement.

Ind-Swift's diversified portfolio of more than 20 products with leadership in several of them and a good R&D product pipeline will create significant value, it said.

Shares of Ind-Swift tanked as much as 16% to Rs 95 apiece, the worst decline this year, after the announcement.

PI Industries, however, soared as much as 9.15% to Rs 3,218 apiece. Of the 31 analysts tracking the company, 23 have a ‘buy’ rating, while four each suggest ‘hold’ and ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a downside of 13.8%.