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Homemarkets newsGMP, IPO Details; Should you Subscribe?

GMP, IPO Details; Should you Subscribe?

Harsha Engineers IPO Opens Tomorrow: The upcoming initial public offering (IPO) of Ahmedabad-based Harsha Engineers International will open for subscription on September 14 and conclude on September 16. The precision bearing cage manufacturer’s public issue 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.

Harsha Engineers IPO: Price Band

Harsha Engineers IPO has fixed price band at Rs 314-330 per share for the Rs 755 crore initial share offer. Half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors, and the remaining 15 per cent for non-institutional investors. Investors can bid for a minimum of 45 equity shares and in multiples of 45 equity shares thereafter.

Harsha Engineers IPO: Objective

Proceeds from the fresh issue of the Harsha Engineers IPO to the tune of up to Rs 270 crore will be utilised for debt payment, up to Rs 76 crore for funding working capital requirements towards the purchase of machinery, up to Rs 7.12 crore for infrastructure repairs and renovation of the existing production facilities and for general corporate proposes.

Risks

Harsha Engineers has an unrelated business of solar EPC which has been merged with the company as a part of reorganisation. Any incremental investment in the solar EPC business may dilute the blended margin of the company. The company’s revenue is highly dependent on a few large customers. Any adverse development or significant reduction in business from these customers may adversely affect Harsha’s financial condition.

Harsha Engineers IPO: Financials

Harsha Engineers’ revenue from operations increased by 51.24 per cent to Rs 1,321.48 crore for fiscal 2022, from Rs 873.75 crore for fiscal 2021, while profit after tax doubled to Rs 91.94 crore for fiscal 2022, from Rs 45.44 crore for fiscal 2021. Axis Capital, Equirus Capital, and JM Financial are the book-running lead managers to the issue.

Harsha Engineers IPO: GMP Today

As per market observers, Harsha Engineers shares are commanding a premium (GMP) of Rs 212 in the grey market today. The company’s shares are expected to list on leading stock exchanges BSE and NSE on Monday, September 26, 2022.

Harsha Engineering was founded by Rajendra Shah and Harish Rangwala in 1986. The promoters hold 99.7 percent of the company’s equity. It offers a diverse suite of precision engineering products across geographies and end-user industries, including automotive, aviation and aerospace, railways, construction, mining, renewable energy, agriculture and other industrial sectors, the DRHP said.

Harsha Engineers IPO: Should you Invest?

“At the higher price band of Rs330, HEIL is valued at 27.7x FY22 earnings of 11.9 which in our view is reasonable compared to its peers. The company with its strong market share in precision bearing cages and being one of the leading players globally in organized bearing cages, having a strong clientele with a long-standing relationship that provides healthy return ratios and visibility going ahead. We recommend investors to SUBSCRIBE to the IPO of HEIL,” said brokerage LKP Securities.

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