The initial public offering (IPO) of leading precision bearing cages manufacturer Harsha Engineers International continued to attract strong response from investors. The issue was subscribed 74.7 times, garnering bids for 125.97 crore equity shares against offer size of 1.68 crore shares, on September 16, the final day of bidding.
The strong response was seen from non-institutional investors, putting in bids 71.32 times the allotted quota, followed by retail investors subscribing 17.63 times the portion set aside for them.
Employees of the company also showed great interest in the IPO , putting in bids 12.07 times the reserved portion. 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.
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The portion set aside for qualified institutional buyers got fully subscribed on the second day of IPO subscription on Thursday. On Friday, the last day, they have bought 178.26 times the allotted quota.
Harsha Engineers International, which enjoys the 60 percent market share in India's precision bearing cages manufacturing, plans to raise Rs 755 crore through its public issue. The IPO comprises a fresh issue of Rs 455 crore and an offer for sale of Rs 300 crore by promoters.
Also Read Moneycontrol's Exclusive Research Note on Harsha Engineeers IPO
The fresh issue money will be utilised for repaying debts, purchase of machinery, infrastructure repairs and renovation of existing production facilities including office premises in India, and general corporate purposes.
The price band for the offer, which closes today, is Rs 314-330 per share.
"At the upper price band, Harsha Engineers is available at a P/E of 32.7x (FY22), which appears reasonably priced compared to peers, Geojit Securities said.
Considering its strong financials and market share, the China-plus-one strategy by major economies and growing outsourcing trend of bearing manufacturers, the brokerage has assigned a subscribe rating on a medium to long term basis.
Harsha Engineers is also amongst the leading manufacturers of precision bearing cages in the world with 6.5 percent market share. It caters to customers with over 50 percent global market share in bearing industry. They also have a solar EPC business (6 percent of revenue), under which they provide turnkey solutions to all solar photovoltaic requirements.
Also read - Harsha Engineers IPO: 10 things to know about the issue
Choice Broking also feels the issue is attractively priced. Hence, considering the future growth outlook of the bearing market; Harsha Engineers' dominant position in the bearing cage market and the demanded attractive valuations, the brokerage has assigned a subscribe rating for the issue.
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