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A $450 million deal to buy Russian motor business Musa has got analysts in upbeat mood on car distributor Inchcape. Tim Richmond, who follows the company closely at Arden Partners, was quick to fire out a buy note to clients due to the promise the acquisition offers.

Musa is a predominantly Moscow-based group, with 75% of its sales from BMW/Mini, Jaguar/Land Rover and Volvo. Foreign-branded car makes grew 61% in Russia last year, while Musa’s sales rose 53% in the first quarter of this year alone, and market forecasts of 25% to 30% growth are being exceeded.

Richmond is excited by the prospect of a £100 million investment programme over the next three years, which he believes could treble Musa’s sales area and significantly boost Inchcape’s exposure to this fast-growing market.

Inchcape already generates sales worth around £1 billion from the Russian business, representing roughly 14% of group turnover. This has encouraged Richmond to up his earnings estimates for this year to 41.3p a share, rising to 47.2p next year, implying a PE of around 10.

by John Marshall