IPD Group Jumps 5% on $37.5M Mining Acquisition: Buy the Breakout or Sell the News?

IPD Group (ASX:IPG) jumped 5.5% to A$4.43 on Tuesday after announcing it will buy Platinum Cables for A$37.5 million. The stock has now rallied 58% since hitting lows in June, which raises the big question: is there still room to run, or is the easy money already made?

The deal looks smart on paper. IPD is paying just 5.2 times EBIT for a business that makes A$44.8 million in revenue with healthy profit margins. With the deal expected to officially close today (December 31), management expects the acquisition to boost earnings per share by 11.5% straight away. For a company already growing nicely, adding profitable revenue at a cheap price is exactly what shareholders want to see.

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Why This Deal Makes Sense

Platinum Cables supplies power and communication cables to Australian miners. These aren’t your everyday cables. They’re built tough for harsh, remote mining sites, which means customers pay premium prices and tend to stick around.

The strategic fit is what makes this deal attractive. IPD Group already serves miners through its CMI business, so Platinum opens doors to sell more products to the same customers. There’s no overlap between what the two companies sell, which means pure growth potential rather than messy integration.

CEO Michael Sainsbury called it “a continuation of our growth strategy that reinforces our leadership in the mining sector.” With Australia’s mining boom showing no signs of slowing, that leadership position matters.

Strong Balance Sheet Keeps Options Open

One thing that stands out is how IPD Group structured this deal. The company is funding the purchase mostly through bank debt, issuing just A$500,000 in new shares. That means existing shareholders barely get diluted.

After the deal closes, IPD’s debt will sit at just 0.9 times its yearly EBITDA. That’s a comfortable level that leaves plenty of room for future acquisitions or to weather any rough patches. The expanded credit facility with CBA also signals the banks remain confident in the business.

For investors worried about companies taking on too much debt to chase growth, IPD’s disciplined approach should provide comfort.

The Investor’s Takeaway

Here’s where things get interesting. Analysts have an average price target of A$4.62, suggesting modest upside from today’s levels. Some brokers see the stock reaching A$5.00, which would mean about 13% gains for patient holders.

The bull case is simple. IPD Group keeps buying good businesses at fair prices while keeping its balance sheet strong. The mining sector needs electrical infrastructure, data centres are booming, and the energy transition requires cables and equipment. IPD sits right in the middle of these trends.

The bear case comes down to timing. After a 58% run from June lows, the stock isn’t cheap anymore. Investors buying today are paying near a 10-month high, which means less cushion if something goes wrong.

Our view: this is a quality deal that strengthens an already solid business. Current shareholders have no reason to sell. New investors might find better entry points if the stock pulls back towards A$4.00, but the long-term story remains compelling for those willing to hold through any short-term noise.