Price, Financials, GMP, Should you Invest?

Harsha Engineers IPO Opens Today: The Rs 760 crore initial public offering (IPO) of Harsha Engineers International is set to open for public bidding on Wednesday, September 14. The IPO is a combination of a fresh issue and offer for sale by shareholders. The company is the largest manufacturer of precision bearing cages by revenue in India. It also has a solar EPC (engineering, procurement, and construction) business under which it provides turnkey solutions for solar photovoltaic requirements.

Harsha Engineers IPO: Price Band

Harsha Engineers IPO has fixed price band at Rs 314-330 per share for the Rs 755 crore initial share offer. Half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors, and the remaining 15 per cent for non-institutional investors. Investors can bid for a minimum of 45 equity shares and in multiples of 45 equity shares thereafter.

Harsha Engineers IPO: Objective

Proceeds from the fresh issue of the Harsha Engineers IPO to the tune of up to Rs 270 crore will be utilised for debt payment, up to Rs 76 crore for funding working capital requirements towards the purchase of machinery, up to Rs 7.12 crore for infrastructure repairs and renovation of the existing production facilities and for general corporate proposes.

Harsha Engineers IPO: Financials

Harsha Engineers’ revenue from operations increased by 51.24 per cent to Rs 1,321.48 crore for fiscal 2022, from Rs 873.75 crore for fiscal 2021, while profit after tax doubled to Rs 91.94 crore for fiscal 2022, from Rs 45.44 crore for fiscal 2021. Axis Capital, Equirus Capital, and JM Financial are the book-running lead managers to the issue.

Harsha Engineers IPO: Key Risks

Depends on limited numbers of customers for revenue. High exposure to foreign currency exchange rate fluctuations. Recent corporate reorganization may lead to administrative and operational difficulties.

Harsha Engineers IPO: GMP Today

According to dealers, Harsha Engineers commanded a premium of Rs 210 in the grey market — or an unofficial market for unlisted securities — on Tuesday. On Friday, the grey market premium or GMP had stood at Rs 150 on Friday.

“The Harsha Engineers IPO looks reasonably priced, given its post-price-to-equity ratio of roughly 32.70 times based on its 2021-22 results,” Abhay Doshi, Co-Founder of Unlisted Arena.

“The company’s top and bottom line growth appear to be fair,” Doshi said.

Should you Subscribe?

Brokerage house Motilal Oswal, said: “HEI has recently diversified into production of bronze bushings, sand casting and specialized stamped components to cater to end-user industries like wind, mining and shipping. It plans to scale up this low volume, high value segment over the next 3-5 years. Besides, it is well placed to capture the growing bearing cage demand across industries.”

“Its increasing focus on other specialized precision components and on the growing EV segment could boost its EBITDA margins. Given growth recovery in auto/auto ancillary and strong momentum in the midcaps, we expect the IPO to do well,” it added.

Giving it a buy tag, Swastika Investmart, said in a note that the company has managed to garner a lion-sized share in the Indian bearing cages market due to its first mover advantage as it was the first player to persuade bearing players to outsource the cage manufacturing than producing it in-house.

“It is a proxy play on India becoming a global manufacturing hub theme, and considering the positive growth outlook, experienced management, and competitive advantages, we have assigned a ‘subscribe’ rating to the issue,” it added.

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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