IPO
The public issue of Harsha Engineers International, the largest manufacturer of precision bearing cages in organised sector in India, has seen a healthy subscription so far. Investors have bought 17.45 crore equity shares against an offer size of 1.68 crores, helping the offer subscribe 10.35 times on September 15, the second day of bidding.
Non-institutional investors looked aggressive from the day one itself, putting in bids 24.91 times the allotted quota, while retail investors have bought shares 9.14 times the portion set aside for them and employees booked 6.34 times.
The employees will get shares at a discount of Rs 31 per unit to the final price as Rs 2.5 crore worth shares out of a total issue size of Rs 755 crore are reserved for them.
The part set aside for qualified institutional buyers was subscribed 1.63 times on Thursday.
The public issue comprises a fresh issue of Rs 455 crore, which will be utilised for repaying debts, capex towards purchase of machinery, infrastructure repairs and renovation of existing production facilities, including office premises in India, and general corporate purposes.
Also read – Harsha Engineers International enjoys more than 60% premium in grey market as IPO opens for bidding
The offer-for-sale part is Rs 300 crore which will go to selling promoters. The price band for the offer, which closes on September 16, is Rs 314-330 per share.
The company controls 50-60 percent of the domestic organised Indian bearing cages market and 6.5 percent of the global organised market. Global bearings market is expected to grow at a CAGR of 6.4 percent, set to reach $171.7 billion by FY29.
Moreover, The Indian bearing cages market is expected to grow at a CAGR of 8.3 percent to $10.3 billion by FY29.
With its superior product mix, long standing relationships with leading clientele, and adding capacities, ACMIIL believes Harsha Engineers is well placed to capitalize on domestic and global opportunities.
Also read – Harsha Engineers IPO. Should you subscribe?
“At the upper price band of Rs 330, the stock is priced at 32.7x its FY22 EPS of Rs 10.08 (based on fully diluted post issue equity). We recommend subscribing to the issue from a long term perspective,” said ACMIIL.
The company has a stronghold in India and long-standing relationships with leading clientele supplying to the Top-6 global bearing manufacturers.
The wide application of bearings growing in different sectors coupled with substantial government initiatives to promote the manufacturing sector is a robust driver for the company. However, the rising raw material prices remain a top concern for the manufacturer, says BP Equities which believes the company is fairly priced in comparison with the listed peers (Timken – 77.3x & Rolex Rings – 39.2x).
Also read – Harsha Engineers IPO opens: 10 things to know about the issue
The brokerage has given this issue a subscribe rating for the long term as well as for the listing gains.
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