56 mins ago
Goldman Sachs raises Solar Industries target on proposed Omnia acquisition
Solar Industries wants to buy Omnia Holdings, a company based in South Africa.
The proposed deal would cost about $1.35 billion.
Goldman Sachs thinks the purchase could help Solar Industries sell more explosives and mining products.
It could also give the company access to new countries and products.
Goldman Sachs estimates that earnings per share could be 11% to 25% higher by financial year 2028 if the deal works well.
However, the brokerage has not added the deal to its official forecasts because it may not close before then.
Goldman Sachs also said it was not predicting whether the acquisition will be completed.
Solar Industries’ shares fell more than 8% while investors considered the proposal.
Goldman Sachs raised its 12-month target for Solar Industries to Rs 26,550 from Rs 20,180 and retained its Buy rating.
The proposed Omnia Holdings acquisition is valued at $1.355 billion, or about Rs 12,950 crore.
Goldman Sachs estimates the deal could increase Solar Industries’ financial year 2028 earnings per share by 11% to 25%.
The brokerage said Omnia could strengthen Solar Industries’ African operations and provide access to markets including Canada, the United States and Latin America.
Solar Industries shares fell more than 8% as investors assessed the deal, which Goldman Sachs has not included in its estimates.
- Who
- Solar Industries and Omnia Holdings are involved, while Goldman Sachs assessed the proposed transaction.
- What
- Solar Industries has proposed acquiring Omnia Holdings for $1.355 billion, and Goldman Sachs raised its Solar Industries target price.
- Where
- Omnia operates in South Africa, Australia, Indonesia, Canada and other markets; the proposed combination would expand Solar Industries’ international operations.
- When
- Goldman Sachs’ analysis focuses on potential financial year 2028 earnings; the deal is not expected to close before financial year 2028.
- Why
- The acquisition could integrate mining and explosives operations, add products and provide access to new geographies.
Strategic and earnings potential
Uncertainty and market concerns
Impact of the Omnia acquisition
Strategic and earnings potential
Goldman Sachs said Omnia could strengthen Solar Industries’ African explosives value chain, add products and open access to markets such as Canada, the United States and Latin America.
Uncertainty and market concerns
The acquisition has not been included in Goldman Sachs’ estimates because it is not expected to close before financial year 2028, and the brokerage took no view on whether it will be completed.
Investor response
Strategic and earnings potential
Goldman Sachs retained its Buy rating and said the company’s growth optionality, including inorganic expansion, supported a higher valuation multiple and target price.
Uncertainty and market concerns
Solar Industries shares fell more than 8% as the market continued to assess the proposed acquisition and its implications.
Key facts
- Proposed acquisition value
- $1.355 billion, equivalent to about Rs 12,950 crore
- Net acquisition value
- $1.255 billion after adjusting for Omnia’s $100 million cash balance
- Potential FY2028 EPS accretion
- 11% to 25%, based on Goldman Sachs’ pro-forma analysis
- Estimated combined FY2028 EPS
- Rs 316 to Rs 354, compared with Goldman Sachs’ existing estimate of Rs 284.1
- Solar Industries target price
- Raised to Rs 26,550 from Rs 20,180
- Solar Industries rating
- Buy retained by Goldman Sachs
- Share-price reaction
- Solar Industries shares fell more than 8% as investors assessed the proposal
Quotes
Goldman Sachs
Brokerage providing analysis of Solar Industries and the proposed Omnia acquisition
““Similarly, AXXIS detonator represents precision electronic initiating system technology and would likely compliment the existing range of SOIL’s Initiating systems, in our view,””
financialexpress.com
““In our view, the acquisition of Omnia is likely to result in a significant metallurgical integration across the value chain, offering a mine-to-metal proposition,””
financialexpress.com
Sources
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