Shares of Rane (Madras) (RML) rose 19% to Rs 578.50 on BSE in intraday trade on Wednesday, amid weaker markets after the company announced that its board has decided to explore divestment/disposal options Rane Light Metal Casting Inc, USA (LMCA).

LMCA is a wholly owned subsidiary of the company acquired in 2016. The company is engaged in the manufacture of high-pressure aluminium die castings for automotive and non-automotive applications.

LMCA accounted for 9.78% (Rs 231.94 crore) of consolidated turnover and 13.33% (Rs 32.2 crore) of RML’s net assets.

“After careful review of LMCA’s operational and financial performance, the company’s board of directors has decided to explore options for divestiture/disposal of LMCA and to seek prior shareholder approval by mail ballot,” RML said in an exchange filing.

RML is a leading manufacturer of steering and suspension products as well as light metal castings. The company posted a consolidated profit after tax of Rs 9.5 crore in the March quarter (Q4FY23), compared to a net loss of Rs 2.5 crore in Q4FY22. Total revenue rose 23.5% to Rs 630.10 crore from Rs 510.30 crore a year earlier.

Sales to Indian OE customers increased by 18%, supported by strong demand in the automotive segment. Export sales rose 45%, driven by a strong offtake of diverted products. Standalone Ebitda margin improved by 71 basis points due to better operating leverage, favourable mix and foreign exchange, partly offset by higher administrative expenses, the company said, adding that the demand environment in the US remained challenging as multiple clients have reduced schedules.

RML delivered strong revenue growth, supported by a strong demand environment in India and a strong offtake from international clients. Growth momentum in India’s auto sector continues to be robust despite management saying it sees a slowdown in major global economies.

The US subsidiary’s planned turnaround was thwarted by poor take-up of new business and even existing business. In the announcement of its fourth-quarter results on May 5, management said the board was closely monitoring the situation and would review the best decision regarding the future of the business, considering the long-term interests of the company.