Majestic Auto completes SHPL acquisition, eyes ₹29.28cr gain

What Majestic Auto announced

Majestic Auto Limited has completed the first phase of its acquisition of Sharan Hospitality Private Limited (SHPL), turning the hospitality firm into a wholly-owned subsidiary. The company said this initial step secures 100% control of SHPL’s paid-up equity capital. The development follows a legal clearance tied to SHPL’s resolution plan. Majestic Auto’s update also outlines the funding and transaction structure across multiple phases. A key takeaway from the disclosure is the expected arbitrage-led gain built into the structure. The company indicated it anticipates a pre-tax gain of about ₹29.28 crore from the overall transaction economics.

Supreme Court order and settlement framework

The acquisition progress follows an order dated July 17, 2026, from the Hon’ble Supreme Court approving the resolution plan. Majestic Auto also disclosed that it received the order on July 23, 2026. Management stated that a Consent and Dispute Settlement Agreement was executed with Assets Care & Reconstruction Enterprise Limited (ARC) on July 15, 2026. The agreement was taken on record by the Supreme Court on July 17, 2026, enabling implementation of the resolution plan. This sequence matters because it removed a key legal impediment that had delayed execution. With the clearance, the company can proceed with the required agreements and payments contemplated under the plan.

Phase 1: securities allotted worth ₹40 crore

In the first phase, Majestic Auto allotted securities worth ₹40 crore. This included 5 lakh equity shares and ₹35 crore in non-convertible debentures (NCDs). The company’s filing indicates that this step is part of the larger resolution-plan implementation. The allotment is positioned as the mechanism through which Majestic Auto secured full equity control of SHPL. The balance components are expected to be completed in subsequent phases. The structure also includes a recoverable inter-corporate deposit (ICD) element that is not treated as sale consideration.

Full resolution plan amount: ₹105.43 crore

Majestic Auto disclosed that the total resolution plan amount is ₹105.43 crore. This is split into ₹81.84 crore as the plan amount and ₹23.59 crore as additional interest. The company also described the funding structure used to execute the plan. It includes ₹76.15 crore towards subscription to SHPL securities. In addition, an ICD of ₹29.28 crore is to be infused, described as recoverable and not part of the sale consideration. Put together, this framework explains why the company separates acquisition cost for securities from the ICD amount.

Transaction structure and components

The disclosure lists specific components across phases including equity shares, NCDs and redeemable preference shares. It also clarifies which instruments are part of phase one versus later steps. While the equity and a portion of NCDs were handled in phase one, the remaining NCD subscription is planned for subsequent phases. The company also noted it will receive 50 lakh bonus redeemable preference shares. The ICD component is separately described as a recoverable deposit. These disclosures help investors map what is being subscribed now versus what is expected later.

Future steps and planned transfer to funds

Majestic Auto said that in subsequent phases it will subscribe to the remaining ₹36.15 crore in NCDs, receive the 50 lakh bonus redeemable preference shares, and extend the ₹29.28 crore ICD. After full acquisition, the company plans to transfer all securities to NovumLake Property Fund and 360 ONE Real Assets Advantage Fund. The financing plan includes a Securities Purchase Agreement with NovumLake and 360 ONE to fund implementation of the resolution plan. Based on the disclosure, the transfer of securities is a planned post-acquisition step. The company’s communication frames this as part of the overall execution mechanics rather than a change to the Supreme Court approved plan. Investors will likely track completion of the subsequent phases and the stated transfer step.

Why the company expects a ₹29.28 crore pre-tax gain

Majestic Auto stated the transaction is structured to generate a clear arbitrage gain. It disclosed an aggregate acquisition cost of ₹76.15 crore for the securities. It also disclosed a total sale consideration of ₹105.43 crore. Based on these figures, the company expects a pre-tax gain of approximately ₹29.28 crore. The company has explicitly linked this gain estimate to the difference between the acquisition cost and the sale consideration. The ICD amount is described as recoverable and not part of sale consideration, which is why the gain computation is anchored on securities acquisition cost versus sale consideration as disclosed.

Market and corporate context in the disclosure

The article text also references Majestic Auto’s current share price at about ₹367. The company noted that it remains debt-free, and mentioned ₹135 crore in planned investments alongside progress on the SHPL resolution plan. Separately, the company had informed BSE that a board meeting was scheduled on August 11, 2026, to consider and approve standalone and consolidated unaudited financial results for the quarter ended June 30, 2026. The disclosure also includes dividend-related information: the board recommended a final dividend of 250% or ₹25 per share for FY2025-26, in addition to an interim dividend of ₹35 per share, taking the total to ₹60 per share, subject to shareholder approval at the ensuing 53rd AGM. For financial performance context, Majestic Auto reported standalone net profit of ₹114.18 crore for FY2025-26 compared with a loss of ₹3.36 crore in FY2024-25, aided by exceptional items.

What investors may track next

The next visible milestones are completion of the remaining NCD subscription and the extension of the ICD as described by the company. Investors may also watch for updates on the transfer of securities to NovumLake Property Fund and 360 ONE Real Assets Advantage Fund, which the company said will occur upon full acquisition. Since the company has tied execution to agreements and phased steps, disclosures on completion timelines and conditions precedent could become important. Separately, the scheduled board review of quarterly results and shareholder voting for the proposed final dividend are standard events that could add context to the broader corporate narrative. For now, the key confirmed point is that phase one is complete and SHPL is a wholly-owned subsidiary, following the Supreme Court’s order.