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Shares of Kesoram Industries today surged nearly 14 per cent as the company has sold tyre manufacturing unit in northern India for Rs 2,200 crore ($331.46 million) to JK Tyre & Industries.
The stock surged as much as 13.6 per cent building on Friday’s gain of 6.8 per cent, its fifth straight session of gains.
According to an analyst, Kesoram has struggled with margins for the business, while MRF, Apollo Tyres, CEAT, and JK Tyre enjoy better margins.
The company had a net debt of Rs 4,832 crore in 2014, according to Eikon data.
The analyst says the deal is beneficial for Kesoram. It will take the loss-making business out of the company, and will help reduce debt.
Kesoram will be left with loss-making Orissa tyre plant. It might see cement assets transferred to other Birla companies in the group, the analyst says.
JK Tyre shares were down 0.6 per cent.
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