The initial public offering (IPO) of Ahmedabad-based Harsha Engineers International opened for subscription on Wednesday. The three-day initial share sale would conclude on September 16. As of 11:33 am, the issue attracted bids for 92,74,185 crore equity shares against the IPO size of 1,68,63,795 shares — subscribed 55 per cent within two hours on the first day of bidding.
Retail individual investors’ portion was booked 0.83 times and non-institutional investors’ category was subscribed 0.62 times. Employee reserved portion was subscribed 0.58 times. Qualified institutional buyers’ category attracted no subscription as of now.
Harsha Engineers has fixed the IPO price band at Rs 314-330 per share for the Rs 755 crore initial share offer. The precision bearing cage manufacturer’s public issue consists of a fresh issue of equity shares aggregating to Rs 455 crore and an offer-for-sale (OFS) of up to Rs 300 crore by existing shareholders.
On the IPO front, half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.
Investors can bid for a minimum of 45 equity shares and in multiples of 45 equity shares thereafter.
Grey market premium:
Market participants said Harsha Engineers IPO grey market premium (GMP) is around Rs 200. It implies that the grey market is expecting the lender to list around Rs 530 (Rs 330 + Rs 200), which is more than 60 per cent to the IPO’s upper band price of Rs 330 per equity share.
Expert View:
Brokerages including Swastika Investmart, Arihant Capital, LKP Securities, Nirmal Bang Securities and Hem Securities have given ‘Subscribe’ rating to the issue, citing strong revenue growth and solid relationship with customers which will drive the business going ahead.
“The government’s thrust on infrastructure, agriculture reforms, the revival of private CAPEX, and rising housing & real estate demand augurs well for the aforementioned sectors and the company’s prospects. The issue has been priced at a P/E of ~32.67, which appears to be fully priced in; nevertheless, the company is a proxy play on India becoming a global manufacturing hub theme, and considering the positive growth outlook, experienced first generation management team and competitive advantages, we have assigned ‘Subscribe’ rating to the issue,” brokerage Swastika Investmart Ltd stated.
According to Nirmal Bang Securities, Harsha Engineers is bringing the issue at price-to-earnings multiple of 33 times on post issue FY22 PAT basis. “Company’s strategically located domestic and international production facilities and warehouses and expertise in tooling, design development and automation with consistent track record of growth and financial performance are looking strong to us. Hence, we recommend “Subscribe” on issue,” the brokerage said.
Arihant Capital Markets, who suggested subscribing the issue for long terms, added that Harsha Engineers has delivered strong revenue growth (22 per cent CAGR) in FY20-FY22. “Presence in 25 countries over 5 continents, comprehensive solutions to customers backed by strong R&D and strong relationships with customers will drive the business going forward,” Arihant Capital said.
LKP Securities, in a report, said, “The company with its strong market share in precision bearing cages and being one of the leading players globally in organised bearing cages, having strong clientele with long standing relationship provides healthy return ratios and visibility going ahead. We recommend investors to ‘Subscribe’ to the IPO.” The public offer will close on September 16, 2022.
“The IPO pricing looks reasonable given the company’s impressive top and bottom line growth. The offer looks fairly priced at a post-issue P/E ratio of around 32.70x based on FY22 earnings. All the categories would see descent subscriptions amid the favourable market conditions and recent positive listings, Manan Doshi of UnlistedArena.com told Business Today.
Harsha Engineers’ revenue from operations increased by 51.24 per cent to Rs 1,321.48 crore for fiscal 2022, from Rs 873.75 crore for fiscal 2021, while profit after tax doubled to Rs 91.94 crore for fiscal 2022, from Rs 45.44 crore for fiscal 2021.
Axis Capital, Equirus Capital and JM Financial are the book-running lead managers to the issue.