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Tega Industries has floated its first public issue on December 1. It will close on December 3.
The company offers comprehensive solutions to global clients in the mineral beneficiation, mining and bulk solids handling industry, across different stages of mining and mineral processing, screening, grinding and material handling, including after-market spends on wear, spare parts, grinding media and power.
The company plans to mop up Rs 619.22 crore through its IPO at the upper price band.
The IPO is entirely an offer-for-sale (OFS) of 1,36,69,478 equity shares by selling shareholders and promoters. Hence, the company will not get any fund from the offer.
Promoters Madan Mohan Mohanka and Manish Mohanka will sell 33,14,657 equity shares and 6,62,931 equity shares, respectively, through the OFS, and the remaining 96,91,890 equity shares will be offloaded by investor Wagner.
The promoter shareholding will come down to 79.17 percent 85.17 percent after this issue.
Investors can bid for a minimum of 33 equity shares and in multiples of 33 shares thereafter. Retail investors can make a minimum investment of Rs 14,949 per lot and their maximum investment would be Rs 1,94,337 for 13 lots.
The share allotment will get finalised by December 8. The unsuccessful investors will get refunds in their bank accounts by December 9, while successful investors will get shares in their demat accounts by December 10.
The trading in equity shares on the BSE and NSE will start from December 13.
The company has garnered Rs 185.77 crore from anchor investors ahead of its initial share sale that opens for public subscription on Wednesday. The company informed the bourses that it has allocated 4,100,842 shares at Rs 453 apiece on November 30 to anchor investors.
Ashoka India Equity Investment Trust Plc, Goldman Sachs, Kotak Funds – India Midcap Fund, Kuber India Fund, Elara India Opportunities Fund, and BNP Paribas Arbitrage are among the investors that participated in the anchor book.
In addition, shares have been allocated to domestic funds, like SBI Mutual Fund, ICICI Prudential Mutual Fund, Axis Mutual Fund, HDFC Mutual Fund, Mirae Assets Tax Saver Fund, Aditya Birla Sun Life Trustee Private Limited, Kotak Mutual Fund and Tata Mutual Fund, that participated in the anchor book.
Tega Industries is a leading manufacturer and distributor of specialised ‘critical to operate’ and recurring consumable products for the global mineral beneficiation, mining, and bulk solids handling industry.
Globally, on the basis of revenues, it is the second-largest producer of polymer-based mill liners as of June 30, 2021.
On a consolidated basis, the company posted revenues of Rs 856.68 crore on FY21 as against the revenues of Rs 695.54 crore in FY20, a YoY growth of 23 percent. Consolidated revenues for FY 19 came in at Rs 643.01 crore.
The company posted a net profit of Rs 136.41 crore in FY21 against a net profit of Rs 65.5 crore in FY20, a YoY jump of 108 percent. The net profit for FY19 stood at Rs 32.67 crore.
For the first quarter of FY22 ended on June 30, 2021, it has earned a net profit of Rs 11.88 crore on a turnover of Rs 179.39 crore.
Most brokerages have assigned ‘subscribe’ rating to the Tega IPO. Although they pointed out the risks of dependence on overseas markets, every analyst stressed on the company’s positioning and reasonable valuation of the stock.
Brokerage firm Marwadi Financial Services highlighted that the company is prone to risks from disruption of supply of raw materials from its key suppliers as it does not have any long-term contracts with them. “The company has global manufacturing facilities, sales and operations exposing it to the risks of doing business in foreign countries,” it said.
“The company is a leading producer of specialised and critical-to-operate products, with high barriers to replacement or substitution,” it added.
“Considering the FY21 adjusted EPS of Rs 20.58 on a post-issue basis, the company is going to list at a P/E of 22.02 with a market cap of Rs 3,003 crore while its peer namely AIA Engineering Ltd is trading at a P/E of 30.40,” said a report from Marwadi Financial Services.
ICICI Securities in its report highlighted that the company has large dependence on international markets from where it generates close to 86 percent of its revenue. This can pose a risk to the business of the company.
Loss of customers or repeat orders along with failure to expand its distribution network can adversely impact the revenues and profitability of the company. “Tega’s strong market position, innovative products and higher entry barriers are likely to help maintain its margins while consistent growth with high repeat business (74 percent) would augur well in the long run,” it said.
Brokerage firm Choice Broking feels that the company’s strengths outweigh the risks it faces from forex rate fluctuations, policy uncertainty, and any change in industry trends.