Know GMP, Subscription, Other Details; Should you Buy?

Automotive component maker Divgi TorqTransfer Systems will become the first company to launch its initial public offering (IPO) in 2023 when the issue opens for subscription on March 1 till March 3.

Divgi TorqTransfer IPO: Price Band

The auto components maker has fixed a price band of Rs 560-590 per equity share and at the upper end, the public issue is expected to fetch around Rs 412 crore. The shares are expected to get listed on the exchanges on March 14.

Divgi TorqTransfer IPO: Offer Size

As part of the OFS, Oman India Joint Investment Fund will offload 22,50,000 shares, while Nilekani’s family trust NRJN Family will sell 14,41,441 shares.

Nilekani family trust will bag around 360 per cent profit for its investment in the company when it will offload 14.4 lakh shares as part of OFS. According to the prospectus Nilekani’s trust acquired shares on an average cost of Rs 125.28. Considering the upper price band of Rs 590, the trust will take home profit of nearly Rs 67 crore.

Other selling shareholders in the OFS include Bharat Bhalchandra Divgi, Sanjay Bhalchandra Divgi, Ashish Anant Divgi, Arun Ramdas Idgunji and Kishore Mangesh Kalbag.

Divgi TorqTransfer IPO: Lot Size

Investors can bid for a minimum of 25 shares and in multiples of 25 shares thereafter. Retail investors can make a minimum investment of Rs 14,750 for a single lot and a maximum of Rs 1,91,750 for 13 lots, at the higher end of the price band.

The company has reserved 75 per cent of the issue size for qualified institutional buyers, 15 per cent for non-institutional investors (high networth individuals, and the remaining 10 per cent for retail investors.

Divgi TorqTransfer IPO: About Company

Divgi TorqTransfer develops and provides system-level transfer case, torque coupler and DCT solutions, to automotive original equipment manufacturers through its three manufacturing and assembling facilities in India.

The company claims to be the largest supplier of transfer case systems to passenger vehicle manufacturers, the only player manufacturing and exporting transfer cases to global OEMs from India and the only manufacturer of torque couplers in India, as per CRISIL report.

Divgi TorqTransfer IPO: GMP

As per market observers, Divgi TorqTransfer Systems shares have been commanding a premium (GMP) of Rs 60 in the grey market in the previous sessions. The equity shares of the company are expected to list on March 14 on stock exchanges BSE and NSE.

Should investors subscribe to the issue? Here’s what experts say:

Parul Sharma, Research Analyst, Samco Securities, recommended investors to subscribe to the IPO, citing sound financials and favorable future growth potential in the long run.

“The company is amongst the very few automotive components entities in India that have the capability to develop and provide system-level transfer case, torque coupler, dual-clutch transmission solutions. The issue appears to be attractively priced at a P/E ratio of 35x when compared to its listed peers,” Sharma said.

ICICI Direct said investors can subscribe to the issue for long term gains as trailing valuations discount its healthy financials. “We like the company for its technical prowess in transmission space and incremental revenue streams coming on board going forward in EV transmission as well as dual clutch transmission space,” the brokerage said.

Nirmal Bang Securities recommended investors to subscribe to the IPO, saying the company has an edge with its ability to manufacture various auto component products that very few in the market replicate. “The IPO is being offered at reasonable valuations at 39.1x FY22 earnings, considering the future growth opportunities,” it said.

Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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