Wadia Group’s Bombay Dyeing Share Price Rallies 20%, Touches 52-Week High; Here’s Why

Bombay Dyeing and manufacturing company share price rose 20% to touch a 52-week high at Rs 168.50 on Thursday, September 14 after the company board approved to sell 22 acres of land parcel situated at Worli, Mumbai. 

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According to reports, the deal value, which is worth around Rs 5,200 crore, is much more than the market capitalisation of the company at Rs 2,900 crore, as of September 13 when the deal was announced.

The board of directors of Bombay Dyeing gave their go ahead to the proposal to sell the land parcel of about 22 acres (along with the associated FSI) in Worli, Mumbai to Goisu Realty Private Limited (a subsidiary of Sumitomo Realty & Development Company Limited) in 2 phases, for a total consideration of about Rs 5,200 crore, subject to approval of its shareholders.

As per the statement by Bombay Dyeing, the company will receive Rs 4,675 crore from the buyer for Phase-I and balance amount of about Rs 525 crore upon completion of certain conditions by the company and execution & consummation of the definitive agreements thereto for Phase- II.

Nusli Wadia, Chairman, in an exchange filing said,“I am happy to inform that Bombay Dyeing and Manufacturing Company is entering into agreements with Sumitomo group for sale of about 22 acres of land (along with the associated FSI) in Worli, Mumbai for a total consideration of about ₹5,200 crores.

The company said that after completion of this transaction, the company would be able to record a pre-tax profit in excess of Rs 4,300 crore on account of this transaction report a strong positive net worth, extinguish all its borrowings thereby saving interest costs and releasing the charge on encumbered assets, pay dividend in future, and have a strong Treasury balance to fund the future realty projects.

Wadia further added that the company was also able to reduce its borrowings by about ₹900 crore during the same time period by selling the ICC apartments, generating a net revenue of about ₹1,050 crore between April 2022 and June 2023.

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“Further, with a view to deleverage and strengthen the balance sheet of the company for funding future real estate projects, the Board decided to monetize BDMC’s land parcel at Worli, Mumbai, after evaluating various other options. The board has also, in-principle, approved the development of the unutilised land parcels available with the company having a potential to create about 3.5 million square feet of residential / commercial property and generate a Revenue of about ₹15,000 crores over the next few years,” Wadia added.