Subscribe with Caution to Divgi Torqtransfer Systems: Choice Equity Broking

Choice Equity Broking IPO report on Divgi Torqtransfer Systems

Divgi TorqTransfer Systems Ltd. (DTTSL), one of the largest players in system-level transfer case systems to OEMs, is coming up with an IPO to raise Rs. 400-412cr, which opens on 01st Mar. and closes on 03rd Mar. 2023. The price band is Rs. 560-590 per share. The IPO is a combination of fresh and OFS issues. DTTSL will not receive any proceeds from the OFS portion. Of the net proceeds from the fresh issue, around Rs. 150.7cr will be used for funding capital expenditure requirements for the purchase of equipments/machineries of the manufacturing facilities (“Capital Expenditure”). Residual funds will be used for general corporate purposes.

Valuation and Outlook

However considering the growth outlook and the ability to expand its profitability with the growing competition, we assign a “Subscribe with Caution ” rating for the issue.