Rama Steel Tubes Share Price Tumbled 4.5 per cent Despite the Company Acquiring UAE-based Automech Group in Rs 728 Crore Deal

A leading Indian manufacturer of steel pipes and tubes, Rama Steel Tubes, announced its strategic plan to acquire the Automech Group. Details as follows:

Rama Steel Tubes Limited, a leading Indian manufacturer of steel pipes and tubes, announced its strategic plan to acquire the Automech Group, a multi-award-winning provider of high-precision manufacturing services based in the UAE. This transaction is valued at a total consideration of AED 296 million (approximately Rs 728 Crores).

The acquisition is described as a defining milestone in RSTL's journey, marking a pivot from being a leading steel tubes manufacturer to becoming a solutions-led engineering powerhouse. The strategic transaction is designed to diversify RSTL into high-value engineering services and strengthen its market presence across the Gulf Cooperation Council (GCC) and the Middle East and North Africa (MENA) regions.

(Note: Automech figures are approximate and unaudited, using an Exchange Rate of 24.33 for conversion of AED to INR)

The acquisition combines RSTL's strong manufacturing base and scale with Automech’s advanced capabilities in precision machining, heavy fabrication, marine services, and dewatering solutions. RSTL intends for this integration to be a significant launch pad for a global push into the high-margin, value-added precision-engineered products segment.

Automech Group, founded in 1991, is a diversified engineering conglomerate serving oil & gas, marine, energy, Construction, and heavy industries across the Gulf, MENA, South, and Southeast Asia. Its key activities include advanced machining and fabrication (like CNC milling and pressure vessel assembly), full-lifecycle heavy fabrication and site installation, surface treatment, custom engineering solutions, dewatering systems, and specialized marine engine services. Automech possesses API, ASME, and ISO-accredited facilities and holds ADNOC-approved vendor status, granting RSTL access to marquee clients in infrastructure, energy, and industrial sectors.

The transaction structure involves RSTL's wholly owned subsidiary, RST International Trading FZE (UAE), acquiring 78.38 per cent of Automech Group, while RSTL will acquire the remaining 21.62 per cent. The transaction is expected to close within six months, subject to customary approvals.

RSTL anticipates a dramatic improvement in its consolidated financial performance post-acquisition, driven by operational synergies and an improved product-service mix.

• Revenue Growth: Consolidated total revenue is expected to rise by over 113 per cent, increasing from Rs. 1,065 crores in FY25 (actual consolidated figure) to approximately over Rs 2,200 crores by FY27E (post-acquisition expected figures).
• EBITDA Increase: Consolidated EBITDA is projected to increase by nearly 415 per cent, from Rs. 46 crores in FY25 to an expected Rs. 236 crores in FY27E.
• Margin Improvement: EBITDA margins are expected to improve from the range of -4 per cent to -10 per cent.

The acquisition is also expected to significantly boost Rama Steel’s standalone financials by shifting part of Automech’s UAE production chain to RSTL’s domestic Indian manufacturing operation. Furthermore, Rama Steel’s standalone financials will be boosted by proposed dividend and royalty payments from Automech once operations are integrated.

Commenting on this development Naresh Kumar Bansal, Chairman & Managing Director, RSTL, said: 'This acquisition is a defining milestone in RSTL's evolution from a leading steel tubes manufacturer to a solutions-led engineering powerhouse. By integrating Automech's world-class capabilities with our strong manufacturing foundation, we are creating a platform for sustainable growth across India and the GEE. This strategic move opens doors to high-margin segments, strengthens our global footprint, and positions us to deliver long-term value to our stakeholders. It is not just an acquisition, it is a transformative opportunity that sets the stage for the next phase of RSTL's growth story."

FY25 Financial Snapshot of RSTL and Automech

In FY25, Rama Steel Tubes Limited (RSTL) reported consolidated revenue of Rs 1,064.8 crores, EBITDA of Rs 45.8 crores, and PAT of Rs 22.7 crores. The UAE-based Automech Group posted approximate figures of Rs 600 crores in revenue, Rs 125 crores in EBITDA, and Rs 100 crores in PAT.

Rama Steel Tubes' share price climbed over 2.5 per cent to its Intraday high in early trade on Friday; however, within just 30 minutes, the stock reversed sharply and slipped more than 4 per cent, despite the company announcing its strategic plan to acquire the Automech Group. As of 10:13 am the stock price was trading at Rs 10.65 per share, down by 3.27 per cent. The stock price of the company has surged over 8 per cent this week so far.

Disclaimer: The article is for informational purposes only and not investment advice.