Harsha Engineers International clocked gains on listing as expected before rising further but most analysts advise booking profits amid market turmoil.
The stock started off the first day’s trade with a whopping 36 percent premium over issue price despite nervousness in equity markets. It climbed further six percent as the day progressed to take total gains to 43 percent over issue price.
Analysts said high premium at listing is justified with the IPO generating stronger than expected demand as qualified institutional investors' portion got subscribed over 178 times. Also, the ask price is fairly valued compared to industry peers.
“We recommend booking partial profits while remaining can be kept for the long term as the company is a comprehensive solution provider offering diversified suite of precision engineering products across geographies and end-user industries and has long-standing relationships with leading clientele,” said Astha Jain, senior research analyst at Hem Securities.
Rajnath Yadav, research analyst at Choice Broking, urged investors to exit given the market volatility.
Although Prashanth Tapse, senior vice president of research at Mehta Equities, sounded “very optimistic” on Harsha Engineers with its dominant position, he too advised booking profits in the current market scenario.
“Risk takers can hold with a long-term perspective,” he added.
Santosh Meena, head of research at Swastika Investmart, termed the company as a proxy play on India becoming a global manufacturing hub: “Those who applied for listing gains can maintain a stop loss at Rs 400. Our recommendation for investors is to hold the allotted shares and long-term investors can accumulate the stock on dips.”
Harsha Engineers, which is the largest manufacturer of precision bearing cages in India, raised Rs 755 crore from the public issue with a strong 74.70 times subscription during September 14-16. Of the total issue size, Rs 455 crore was raised through fresh issuance which will be used in repayment of debts, capital expenditure towards purchase of machinery, and existing production facilities.
Sensex was down 860.62 points or 1.48 percent at 57,238.30, and the Nifty down 285.50 points or 1.65 percent at 17041.80 following weak global cues. This is the fourth straight day of selling on Dalal Street.
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