The initial public offering (IPO) of Harsha Engineers International was subscribed 15 percent after it opened for subscription on September 14 morning, with bids coming in for 24.56 lakh equity shares against an offer size of 1.68 crore shares.
The offer size was reduced to 1.68 crore equity shares from nearly 2.3 crore after the company mopped up Rs 225.74 crore through the anchor book the previous day.
Retail investors subscribed 24 percent of their quota of shares and the employees bid for 27 percent of the portion reserved for them. Shares worth Rs 2.5 crore have been set aside for the company staff who will also get a discount of Rs 31 a share to the final price.
Non-institutional investors bought 11 percent of their quota of shares, while qualified institutional buyers bought 630 shares against the 47.92 lakh reserved for them.
The precision bearing cages manufacturer is looking to raise Rs 755 crore through the IPO that comprises a fresh issue of Rs 455 crore and an offer for sale of shares worth Rs 300 crore by promoters.
The price band for its IPO, which closes September 16, is Rs 314-330 a share.
The company will utilise the fresh issue proceeds for repaying of some debt, purchase of machinery, and infrastructure repairs and renovation of production facilities including office premises in India, and general corporate purposes.
Most of analysts have given a thumbs up to the offer, given the favourable long-term prospects with good earnings visibility, long standing relationship with key industry players, and healthy market share in organised precision bearing cages market.
On the upper price band of Rs 330 and earnings per share (EPS) of Rs 11.9 for FY22, the P/E (price-to-earnings) ratio works out to be 27.7x. “As per the prospectus, the valuation looks reasonable considering the average industry P/E of 50.9x,” Vikrant Kashyap of KRChoksey Research says.
He believes the company’s long-term prospects are favourable, given its long-standing relationship with key industry players.
The company enjoys a healthy market share of 50-60 percent in the Indian organised precision bearing cages market. The company has healthy return ratios and good earnings visibility going ahead.
Harsha Engineers is available at a discount to its listed industry peers. KRChoksey recommends that investors “subscribe” to the IPO, Kashyap said.
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Keyword: Harsha Engineers International IPO Day 1: Issue subscribed 15%, retail portion booked 24%>