Initial public offering of Harsha Engineers (HEIL) got over subscribed by 10.35 times on the last day of the second day of bidding process on September 15. The public offer has received bids for 17,45,50,545 shares against 1,68,63,795 shares offered by the company, at a price band of Rs 314-330, according to the data available on the stock exchanges. The IPO will close on September 16.
The reserved portion of non-institutional investors witnessed a subscription of 24.91 times. Retail portion also witnessed a robust demand and was subscribed 9.14 times. The employee portion was subscribed 6.34 times. The qualified institutional buyer portion was subscribed 1.63 times.
Brokerages including 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.
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.
HEIL is anticipated to profit from the rising outsourcing trend in the bearing sector backed by its diverse array of precision engineering products, 4 strategically placed production locations, and competence in tooling, design development, and automation. The market for bearing cages is anticipated to develop at a CAGR of 6-8 per cent between 2021 and 2029, with India’s market likely to grow at 8.3 per cent.
Going forward, the company is expanding its product portfolio to introduce sand-casting; value-added stamping components and bronze bushings to cater to more end user industries such as wind, mining and shipping sectors.
Axis Capital Limited, Equirus Capital Private Limited, and JM Financial Limited are the book-running lead managers to the issue, and Link Intime India Private Limited is the registrar of the offer. The equity shares are proposed to be listed on BSE and NSE.
Meanwhile, IPOWatch suggested that Harsha Engineers IPO grey market premium (GMP) was hovering around Rs 220 on September 15. It implies that the grey market is expecting the company to list around Rs 550 (Rs 330 + Rs 220), which is over 65 per cent premium to the IPO’s upper band price of Rs 330 per equity share.
Also read: Harsha Engineers IPO to open on September 14; should you subscribe?
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