Harsha Engineers IPO Price, GMP, Review, Details: The initial public offering (IPO) of Harsha Engineers International, a manufacturer of precision bearing cages, opened for subscription on Wednesday, September 14, 2022, and was oversubscribed within a few hours on the first day of bidding.
The issue opened for public subscription at 10 am and was subscribed 1.64 times as of 2:36 pm. It received total bids for 2,76,14,745 shares across both the stock exchanges against 1,68,63,795 shares on offer, data from National Stock Exchange (NSE) showed.
The Rs 755 crore Harsha Engineers IPO will be available for subscription till Friday, September 16, 2022, and the price band of the company has been fixed at Rs 314-330 per share.
Harsha Engineers IPO 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. As a part of the OFS, Harish Rangwala (up to Rs 75 crore), Rajendra Shah (up to Rs 66.75 crore), Pilak Shah (up to Rs 16.5 crore), Charusheela Rangwala (up to Rs 75 crore) and Nirmala Shah (up to Rs 66.75 crore) will offload shares, according to the information provided in the red herring prospectus (RHP).
The net proceeds from the fresh issue will be utilised for pre-payment or scheduled repayment of a portion of the existing borrowing availed by our company, funding capital expenditure requirements towards purchase of machinery, infrastructure repairs and renovation of our existing production facilities including office premises in India and general corporate purposes.
Harsha Engineers International is the largest manufacturer of precision bearing cages in India (brass/steel/polyamide) with 50-60 per cent market share in the organized market. It is also one of the leading players globally with market share of 6.5 per cent for brass, steel and polyamide cages in CY21 (forming 75 per cent of global bearing cage requirement). It caters to each of the top six global bearing companies and derives 75 per cent revenue from this segment.
The company has five manufacturing facilities with two of its principal manufacturing facilities at Changodar and one at Moraiya, near Ahmedabad in Gujarat in India, and one manufacturing unit each at Changshu, China and Ghimbav Brasov in Romania, which allow access to its customers in over 25 countries.
Half of the issue size of Harsha Engineers IPO has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 35 per cent for retail investors.
Investors who wish to subscribe to Harsha Engineers IPO can bid in a lot of 45 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,850 to get a single lot of Harsha Engineers International. The shares will be listed on both BSE and NSE.
The applicants also must note that the cut-off time for UPI mandate acceptance is Friday, September 16, 2022, upto 5:00 pm, the last day of IPO bidding. If they fail to do so then their application may not be considered.
Axis Capital, Equirus Capital and JM Financial are the book-running lead managers to the offer while Link Intime India is the registrar of the issue.
Before heading into the IPO, the Ahmedabad-based company on Tuesday raised over Rs 225.74 crore (Rs 2,25,74,82,150) from 23 anchor investors in lieu of 68,40,855 equity shares at Rs 330 each, data from the stock exchanges showed.
The anchor investors include Whiteoak Capital Funds, Goldman Sachs Funds, HDFC MF, SBI MF, UTI MF, SBI Life Insurance Company, Abu Dhabi Investment Authority, Nippon Life India MF, ICICI Prudential MF, L&T MF and ICICI Prudential Life Insurance Company among others.
The research teams at IIFL Securities, Motilal Oswal Financial Services, Geojit Financial Services and LKP Securities in their respective IPO notes have given a “Subscribe” rating to the offer.
IIFL Research in its IPO note said, “At the upper price band of ₹330, Harsha Engineers International Limited is demanding a P/E multiple of ~20.5X based on FY22 earnings while the company’s price to sales ratiois at 2.27X of FY22 revenue. The industry average PE multiple is of 50.98X of FY22 revenue. Considering ~60% market share in the organized segment of the Indian bearing cages market, long standing relationship with clientele, expertise in tooling, design development and automation, plans to strengthen its technological leadership, and focus on increasing operational efficiencies, we recommend ‘SUBSCRIBE’ to the issue with a long term perspective.”
Motilal Oswal Financial Services in its reserch report noted, “HEIL with its dominant position is well placed to capture the growing bearing cage demand across industries. We like its increasing focus on other specialized precision components and on the growing EV segment which could boost its EBITDA margins. It is valued at 32.7x FY22 P/E which is at par with itslisted peers. Given growth recovery in auto/auto ancillary and strong momentum in the midcaps, we expect the IPO to do well. We suggest investors to Subscribe for listing gains.”
The share allotment is likely to take place on Wednesday, September 21, 2022, and the shares are expected to be listed on Monday, September 26, 2022, according to the timeline given in the RHP.
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