scorecardDivgi TorqTransfer Systems’ IPO subscribed 5.44 times on last day
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Divgi TorqTransfer Systems’ IPO subscribed 5.44 times on last day

Divgi TorqTransfer Systems’ IPO subscribed 5.44 times on last day
Stock Market3 min read
  • The IPO of Divgi TorqTransfer Systems was subscribed 5.44 times on the last day.
  • The IPO received good demand from qualified institutional investors and retail investors.
  • The shares of the company are currently commanding a grey market premium, or GMP, of ₹70 per share.
The IPO of Pune-based automotive component manufacturer Divgi TorqTransfer Systems closed on Friday, and was subscribed 5.44 times by investors.

The issue received good demand from qualified institutional investors and retail investors who subscribed the IPO by 7.83 times and 4.31 times respectively.

The company had plans to raise ₹412 crore at the upper end of the price band. The offer has a fresh issue of ₹180 crore, along with an offer for sale (OFS) of up to 39.34 lakh equity shares to be sold by promoters and shareholders.

The price band of the IPO is set at ₹560-590 per share. The company intends to use funds from the fresh issue towards the purchase of equipment/machinery at its manufacturing facilities, and general corporate purposes.
Category of investors

Subscription status

Qualified institutional buyers

7.83 times

Non institutional investors

1.40 times

Retail

4.31 times

Overall

5.44 times

The shares of the company are currently commanding a grey market premium, or GMP, of ₹70 per share. GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges.

The company designs, develops, manufactures and supplies software-embedded electronically controlled transfer cases and torque couplers for customers like Tata Motors, Mahindra & Mahindra and others.

“From a valuation standpoint, based on the FY22 figures, the issue appears to be attractively priced at a P/E ratio of 35x when compared to its listed peers. However, the business has high customer concentration risk (91 percent of revenues comes from the top 5 customers and 54% is generated from 1 customer),” said Parul Sharma, research analyst at Samco Securities while recommending investors to ‘Subscribe’.

The company raised ₹185.45 crore from 12 anchor investors by allotting 31.43 lakh equity shares, ahead of its IPO.

The company’s overseas sales are primarily dependent on two countries – China and Russia, which exposes it to risks of concentration. Both countries together contribute to over 77% of its overall export revenue.
Year

Revenue from operations

Net profit

EBITDA margin

FY22

₹242 crore

₹46 crore

28.07%

FY21

₹195 crore

₹38 crore

27.82%

FY20

₹171 crore

₹28 crore

23.22%

Source: RHP

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