Harsha Engineers International’s IPO got oversubscribed 74.70 times on the last day of the public offer. Qualified Institutional Buyers (QIBs) were the highest bidders in the IPO, followed by high-net-worth clients. Retail investors also showed strong demand for the IPO. Trading on IPO on the gray market on Sunday 240. The Company shall complete the process of allotting shares to the bidders within six working days from the closing day of the IPO.
Harsha Engineers IPO GMP
Harsh Engineers in Gray Market IPO is the GMP of 240 per equity share at present. A gray market is where shares of a company are offered to traders unofficially.
with the GMP 240 per share, expected to list at a premium of Harsha Engineers 570 per share (upper price band 330 per plus 240 GMP per share).
Harsha Engineers IPO Allotment
In its red herring prospectus, Harsha Engineers stated that “the company is required to complete the allotment as per offer within six working days from the closing date of bid/offer.”
That said, Harsh Engineers is expected to allot shares to eligible bidders in the IPO on September 21.
The company is likely to make its own Market Debut on September 26, 2022. It will be listed on both NSE and BSE.
Harsha Engineers IPO
Harsha Engineers launches its Initial Public Offer (IPO) to raise 755 crores. On the third day, the IPO was heavily subscribed 74.70 times. The portion reserved for QIBs was oversubscribed by 178.26 times, while the share of NII category (HNI) was oversubscribed 71.32 times. The portion reserved for retail individual investors was subscribed 17.63 times.
The price band of IPO is 314 more 330 per equity share.
Growth Outlook!
Harsha Engineers is the largest manufacturer of precision bearing cages in India, in terms of revenue, in the organized sector, and one of the leading manufacturers of precision bearing cages in the world. The company offers a diverse suite of precision engineering products across geographies and end user industries.
The organized segment of the Indian bearing cage market in CY 2021 accounts for around 50-60% of the market share and 6.5% of the market share in the global organized bearing cage market for brass, steel and polyamide cages.
In FY22, the company’s revenue registered a strong growth 1,321.5 crore vs. 873.7 crore in FY21 and 885.8 crore in FY20. PAT climbed 91.9 crore in FY22 as against 45.4 crore in FY 2011 and 21.9 crore in FY20. As on March 31, 2022, the company’s EBITDA and PAT margins stood at 14.1% and 6.9%, respectively.
In his IPO note, KR Choksi in his report earlier said that “We believe that the long-term prospects of the company are favorable, with long-term relationships with major industry players. The company enjoys a healthy market share of 50-60% in Indian Enjoys. Organized precision bearing cages market. Company has healthy return ratio and good earnings visibility.”
Further, in its IPO note, Ventura Securities had said, “We expect HEIL’s Revenue / EBITDA / PAT to grow at a CAGR of 17.2% / 22.7% / 32.1% to 17%. 2,125 crore/ 313 crore/ 212 crores in FY22-25E respectively, while EBITDA and PAT margins are expected to improve by 191bps (14.7%) and 301bps (10.0%) respectively in the same period. Thereafter, the RoIC is expected to improve from 586bps to 21.5% by FY25.”
In its note, Ventura Securities explained a bull and bear case scenario for the company based on its FY25 revenue and PAT margin estimates.
In the bull case, Ventura’s note said, “We have assumed FY20 revenue of Rs 2,400 crore (FY22-25 CAGR 22.0%) and PAT margin of 10%, resulting in a bull case price target. 461 per share (up 39.7% from IPO price).
In the bear case, the note said, “We have assumed FY25 revenue of INR 1,800 crore (FY22-25 CAGR 10.9%) and PAT margin of 8.0%, resulting in a bear case price target 277 per share (a 16.1% drop from the IPO price).”
On the stock exchanges, Harsh Engineers will compete against listed firms such as Timken India, SKF India, Rolex Rings and Sundaram Fasteners.
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