Harsha Engineers IPO is open for subscription, and the last date to apply is Friday, 16th of September!

Harsha Engineers IPO is open for subscription!

Harsha Engineers IPO is open for subscription

The company was incorporated in 2010, and it is the largest manufacturer of precision bearing cages in terms of total sales. The company has customers across 25 countries spanning 5 continents. The company is mainly into two businesses:-

  1. Engineering Business- It comprises the manufacturing of precision bearing cages. Stamped components, brass castings, welded assemblies, etc. 
  2. Solar EPC business- it provides turnkey solutions for solar photovoltaic requirements and maintenance in the solar sector. 

The company has 5 manufacturing facilities, three in India and one each in China and Romania. The company has a diversity of products and customer geographies, which is a good positive for the diversification of business. 

Related: IPO valuation: How is the IPO price decided?

IPO details of Harsha Engineers Limited

The IPO details are as follows:-

  1. The IPO opens on 14th September (Wednesday) and closes on 16th September (Friday). The anchor book opened one day before the subscription, i.e. 13th September.
  2. The company aims to raise Rs 755 crores from its IPO. The fresh issue is 60%, i.e. Rs 455 crores. Rs 300 crores are offered for sale by the promoters of the company. 
  3. The shares are being offered at a price band of Rs 314 to Rs 330 per share. The company employees are eligible for a discount of Rs 31 per share. 
  4. The reservation for qualified institutional buyers (including anchor book) is 50%. Retail investors can bid for 35% of the book, while 15% is reserved for non-institutional investors. 
  5. The company will use the funds to repay debt and for general corporate purposes. The purchase of machinery and infrastructure repairs are other uses of the money raised. 
  6. The company claims to have more than 50% share of the precision bearing cages in India. Also, the global market share is expected to be 6.5%. 
  7. The company's revenue increased by 51.2% in FY22 to reach Rs 1321.48 crores. The firm's main business is its engineering business, and the share of exports in the engineering business is around two-thirds. The firm's profit was Rs 91.94 crores as the engineering business grew rapidly, and the solar EPC business narrowed its losses. EBIDTA margin was at 12.8% in FY22 vs 13.9% in FY21. 
  8. The allotment is expected to be finalized by 21st September. The shares will be credited to your account by the 23rd, and the listing date is expected to be the 26th of September. 
  9. The book-running lead managers are JM Financial, Equirus Capital and Axis Capital. 

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The shares are being offered at a post-IPO PE ratio of 32.7 at the upper end of the price band. The post IPO EPS is Rs 10.09. This means that the IPO looks reasonably priced. More than 50% of business is from China and Europe. Any bad news from these geographies will affect the company's share price. If you are looking to invest for the long term, the stock looks like a decent bet. You should not expect short-term gains because of the market uncertainties, but long term potential looks sound.

Related: How IPOs differ from NFOs?

Harsha Engineers IPO - Apply or avoid?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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