BackHarsha Engineers to debut on 26 Sept: Know what latest GMP says about possible listing price
Qualified institutional buyers showed a strong appetite for the IPO, while retail and high net-worth investors also tapped the issue robustly. The IPO received a massive 74.70 oversubscription overall.
PremiumBearing cages manufacturer, Harsha Engineers will make its market debut tomorrow. The company's ₹755 crore IPO is the most subscribed public offer for the current year. Qualified institutional buyers showed a strong appetite for the IPO, while retail and high net-worth investors also tapped the issue robustly. The IPO received a massive 74.70 oversubscription overall. Currently, the GMP price of the issue is ₹170 per equity share. Harsha Engineers will list on BSE and NSE on Monday.
Harsha Engineers IPO GMP
As per IPO Watch, in the grey market, the IPO has a GMP of ₹170. That means Harsha Engineers may list at ₹500 per equity share on stock exchanges. The listing price is accumulated by adding both the IPO upper price band of ₹330 per share and the GMP price of ₹170 per share.
However, it needs to be noted that a grey market is where a company's shares are offered unofficially to traders. The grey market premium (GMP) gives a brief idea of how an IPO may react during its listing day.
In a statement, NSE on Harsha Engineers said, "the equity shares of the following company shall be listed and admitted to dealings on the Exchange w.e.f. September 26, 2022. Trading shall be in the Normal Market segment – Compulsory Demat (Rolling Settlement) for all investors."
Harsha Engineers IPO
The IPO had a price band of ₹314 and ₹330 per equity share. The IPO was launched on September 14 and was available till September 16.
On the last day of the issue, the IPO was oversubscribed by 74.70 times. QIBs were the top investors as the portion reserved for this category oversubscribed by a whopping 178.26 times, while the portion for the NII category (HNIs) subscribed by 71.32 times. The reserved portion for retail individual investors was oversubscribed by 17.63 times.
What do experts say about Harsha Engineers?
In an IPO note, Avinash Kumar Pathak Research Analyst at LKP Securities said, " The company with its strong market share in precision bearing cages and being one of the leading players globally in organized bearing cages, having strong clientele with long-standing relationship provides healthy return ratios and visibility going ahead."
Meanwhile, AUM Capital in its IPO said, "Taking into consideration its strong business acumen and deep-rooted relationship with both its domestic and international customers, the company is focused to meet its long-term growth objectives. Further, the electrification of vehicles shall lead to an increase in demand for precisions."
Further, Ventura Securities in its IPO note had said, "We are expecting HEIL’s revenue/ EBITDA/ PAT to grow at a CAGR of 17.2%/ 22.7%/ 32.1% to ₹2,125 crore/ ₹313 crore/ ₹212 crore respectively over FY22-25E, while EBITDA and PAT margins are expected to improve by 191bps (to 14.7%) and 301bps (to 10.0%) respectively over the same period. Subsequently, RoIC is expected to improve by 586bps to 21.5% by FY25."
Ventura highlighted its bull and bear case scenarios for Harsha Engineers based on FY25 revenues and PAT margins estimates. In the case of bull, the brokerage said, "We have assumed FY25 revenues of ₹2,400 cr (FY22-25 CAGR of 22.0%) and PAT margin of 10%, which will result in a Bull Case price target of ₹461 per share (an upside of 39.7% from IPO price)."
However, in the case of the bear, Ventura has assumed FY25 revenues of ₹1,800 cr (FY22-25 CAGR of 10.9%) and PAT margin of 8.0%, which will result in a Bear Case price target of ₹277 per share (a downside of 16.1% from IPO price).
Harsha Engineers' peers on stock exchanges are -- Timken India, SKF, Rolex Rings, and Sundaram Fastners.
As per KR Choksey report, the company's long-term prospects are favorable, given its long-standing relationship with key industry players. The company enjoys a healthy market share of 50-60% in the Indian organized precision bearing cages market. The company has healthy return ratios and good earnings visibility going ahead. HEIL is available at a discount to its listed industry peers.
Harsha Engineers is the largest manufacturer of precision bearing cages, in terms of revenue, in organised sector in India, and among the leading manufacturers of precision bearing cages in the world. The company offers diversified suite of precision engineering products across geographies and end-user industries.
The company has approximately 50-60% of the market share in the organised segment of the Indian bearing cages market and 6.5% of the market share in the global organised bearing cages market for brass, steel, and polyamide cages in CY 2021.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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