Rama Steel Tubes acquires Automech group, expands into high-margin engineering

Rama Steel Tubes Limited (RSTL) will acquire 100% stake in Automech Group Holding Limited, a UAE-based provider of high-precision manufacturing services, machines, and components, for an aggregate consideration of AED 296 million. The acquisition involves RSTL's wholly-owned subsidiary, RST International Trading FZE (UAE), acquiring 78.38% (AED 232 million), and RSTL directly acquiring 21.62% (AED 64 million). The AED 64 million consideration for RSTL's stake will be adjusted or payable against the issuance of fresh equity shares.

This acquisition, expected to close in 5-6 months, aims to diversify RSTL's revenue streams and achieve operational synergies. Automech Group, founded in 1991, operates eight subsidiaries specializing in steel fabrications, construction, precision engineering, marine engine services, and dewatering management. Post-acquisition, RSTL expects consolidated total revenue to increase by approximately 113% to over 2,200 crores by FY27E, with EBITDA margins improving from about 4% to about 10%.

Automech Group reported a consolidated turnover of AED 192.30 million as of December 31, 2024, with assets totaling AED 198.73 million. For FY25, Automech's standalone revenues were 611 crores, with a profit of 101 crores, and an estimated revenue of 600.00 crores, EBITDA of 125.00 crores, and PAT of 100.00 crores. RSTL's FY25 consolidated financials reported revenue of 1,064.8 crores, EBITDA of 45.8 crores, and PAT of 22.7 crores.