Shares of Kinetic Engineering today surged as much as 5 per cent on bourses in morning trade and hit its upper circuit limit of Rs 36.95 on the BSE.
The rally sustained for the second straight day and the stock has gained as much as 10 per cent in just two days after the company sold its remaining stake in Mahindra Two Wheelers.
On February 24, Kinetic Engineering exited the two-wheeler segment completely by selling its remaining stake in Mahindra Two Wheelers to private equity firm Samena Capital for about Rs 182.1 crore.
Accordingly on February 25, the Kinetic Engineering stock jumped 5 per cent to Rs 35.20 on the BSE and continuing with the momentum the stock surged another 5 per cent and got stuck at its upper circuit limit of Rs 36.95 on the BSE today.
The Pune-based company had originally acquired the stake in November 2008 when Group firm Kinetic Motor Company sold its two-wheeler business assets to M&M in a cash and stock deal. Subsequently, the home-grown auto major merged Kinetic Engineering with itself in 2012.
Market experts said the uptrend in the counter was largely because of the Samena Capital deal. The net proceeds would be around Rs 109.8 crore, which KEL would use for its business operations.
"We will utilise the proceeds to meet various obligations of the automotive systems business, including working capital and FCCBs/debt repayment requirements to strengthen our balance sheet," KEL Vice-Chairperson Sulajja Firodia Motwani said.