Swaraj Engines, Kirloskar Industries hit new 52-week highs. Here's why

New Delhi: Shares of Swaraj Engines rallied as much as 15 per cent during the initial hours of the trading session on Wednesday to hit a fresh 52-week high after Mahindra & Mahindra looked to increase stake in the company.

Mahindra & Mahindra(M&M) said it will acquire an additional 21,14,349 equity shares accounting for a 17.41 per cent stake in Swaraj Engine from Kirloskar Industries at a price of Rs 1,400 per share amounting to Rs 296 crore.

The acquisition by the bluechip auto manufacturer will result in the company's stake in Swaraj Engines (SEL) rising to 52.13 per cent from 34.72 per cent earlier, M&M said in a regulatory filing.

Following the development, shares of Swaraj Engines jumped 16 per cent to Rs 1,960, its new 52-week highs, before pairing up some gains to trade at Rs 1,947.5 at 10.15 am. The stock had settled at Rs 1,694.85 in the previous session.

At the same time, Kirloskar Industries zoomed 11 per cent to Rs 1,810, its 52-week high, whereas Mahindra & Mahindra stock rose about 2 per cent to Rs 1322.40.

Swaraj Engines, which is in the business of manufacturing Diesel Engines and their components, had total revenue from operations of Rs 1,138.15 crores for the year ended March 31, 2022.

The company also manufactures and supplies diesel engines in the range of 22 HP to above 65 HP for fitment in tractors to the farm equipment sector of Mahindra & Mahindra.

According to the exchange filing, the aforementioned acquisition is likely to be completed by September 30, 2022, and will be paid in cash.

Incorporated in 1985, Mohali-based Swaraj Engines was promoted by erstwhile Punjab Tractors, which was later merged with Mahindra and Mahindra and Kirloskar Industries (formerly known as Kirloskar Oil Engines).