Trading On margin

Harsha Engineers IPO: Latest GMP; learn more about the subdivision, the listing

The Harsha Engineers International IPO received a 74.70x oversubscription on the last day of the public offering. Qualified Institutional Buyers (QIBs) made the highest bid in the IPO, followed by High Net Worth Customers. Retail investors have also shown strong demand for the IPO. On Sunday, in the gray market, the IPO is trading at 240. The company will complete the process of allocating shares to bidders within six business days from the closing day of the IPO.

Harsha Engineers IPO GMP

On the gray market, the Harsha Engineers IPO has a GMP of 240 per share currently. A gray market is where shares of a company are offered informally to traders.

With a GMP of 240 per share, Harsha Engineers is expected to list at a premium of 570 per share (upper price bracket of 330 each more 240 per GMP share).

Harsha Engineers IPO Award

In its red herring prospectus, Harsha Engineers stated that “the Company is required to complete the allotment pursuant to the Offer within six business days from the date of closing of the offer/offer “.

That said, Harsha Engineers is expected to allot shares to eligible bidders at the IPO on September 21.

The company is expected to make its market debut on September 26, 2022. It will be listed on both NSE and BSE.

IPO of Harsha Engineers

Harsha Engineers has launched its initial public offering (IPO) to raise 755 crore. On day 3, the IPO was oversubscribed by a whopping 74.70 times. The QIB share was oversubscribed by 178.26 times, while the NII (HNI) category share was oversubscribed by 71.32 times. The portion reserved for private individuals was oversubscribed by 17.63 times.

The IPO has a price range of 314 and 330 per share.

Growth prospects!

Harsha Engineers is the largest manufacturer of precision bearing cages, by revenue, in the organized sector in India, and among the leading manufacturers of precision bearing cages in the world. The company offers a diverse range of precision engineering products across all geographies and end-user industries.

It holds around 50-60% market share in the organized segment of the Indian roll cage market and 6.5% market share in the global organized roll cage market for brass, steel cages and in polyamide in CY 2021.

In FY22, the company’s revenue grew strongly to 1,321.5 crore against 873.7 crore in FY21 and 885.8 crore in FY20. PAT climbed to 91.9 crore in FY22 vs. 45.4 crore in FY21 and 21.9 crore in FY20. As of March 31, 2022, the company’s EBITDA and PAT margin were 14.1% and 6.9% respectively.

In its IPO note, KR Choksey in its report earlier said that “We believe the long-term prospects for the business are favorable, given the long-standing relationship with major players in the industry The company enjoys a healthy market share of 50-60% in India organized market for precision bearing cages The company is showing healthy rates of return and good profit visibility going forward .

Additionally, in its IPO note, Ventura Securities had stated, “We expect HEIL’s revenue / EBITDA / PAT to grow at a CAGR of 17.2% / 22.7% / 32.1 % for 2,125 credits/ 313 credits/ 212 cr respectively in FY22-25E, while EBITDA and PAT margins are expected to improve by 191 bps (to 14.7%) and 301 bps (to 10.0%) respectively over the same period . Thereafter, RoIC is expected to improve by 586 basis points to 21.5% by FY25.”

In its note, Ventura Securities also explained a bullish and bearish scenario for the company based on the company’s FY25 revenue and PAT margin estimates.

In the bullish case, Ventura’s rating said: “We have assumed FY25 revenue of INR 2,400 cr (FY22-25 CAGR of 22.0%) and a PAT margin of 10%, which will result in a target Bull Case Price List 461 per share (a 39.7% increase from the IPO price).

In the bearish case, the note stated: “We have assumed FY25 revenue of INR 1,800 cr (FY22-25 CAGR of 10.9%) and a PAT margin of 8.0%, which will result in a target of Bear Case award from 277 per share (a 16.1% decline from the IPO price).”

In the stock markets, Harsha Engineers will compete with listed companies like Timken India, SKF India, Rolex Rings and Sundaram Fasteners.

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