Harsha Engineers IPO Day 2: GMP, Subscription, Valuation, Other Details; Should you Invest?

Harsha Engineers IPO Subscription Day 2: Harsha Engineers IPO got fully subscribed on the first day of subscription. The public offer received bids for 3,24,61,830 shares as against 1,68,63,795 shares on offer, translating into 1.92 times subscription, according to data available with the NSE till 1734 hrs. The public issue will conclude on Friday. 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.

Harsha Engineers IPO: Subscription Status

Retail individual investors’ category received 2.28 times subscription, while the quota for non-institutional investors was subscribed 3.60 times. The category for qualified institutional buyers (QIBs) got 0.05 times subscription.

Harsha Engineers IPO: Price Band

The price band has been fixed at Rs 314-330 per share for its initial share sale. 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).

Harsha Engineers IPO: Objective

The proceeds from the fresh issue will be utilised for debt payment, funding working capital requirements towards purchase of machinery, infrastructure repairs and renovation of the existing production facilities and for general corporate proposes.

Harsha Engineers International Ltd is the largest manufacturer of precision bearing cages, with 50-60% market share in the organized market. It offers diversified suite of precision engineering products across geographies and end-user industries. It operates under 2 business divisions – engineering business and solar EPC business.

Harsha Engineers IPO: Should you Subscribe?

“In terms of valuations, the post-issue P/E works out to 32.7x FY22 EPS (at the upper end of the issue price band). Company’s consolidated PAT has grown at CAGR of 105 per cent over FY20-22 on back of margin expansion. HEIL has diverse product portfolio and strong expertise; we believe that these positives are yet to be factored in the valuations commanded by the company. Thus, we have a SUBSCRIBE rating on the issue,” said brokerage Angel One.

IIFL Research in its IPO note said, “At the upper price band of Rs 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 per cent 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.”

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.

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.

Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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