Harsha Engineers IPO opens today; grey market premium is at ₹210

• The initial public offering (IPO) of the Ahmedabad-based manufacturer is all set to raise ₹755 crore through this IPO.
• The company’s profit grew by over four times in the last three financial years.
• The IPO is open for subscription from today September 14 to September 16.
• The price band of the issue is fixed at ₹314-₹330 per share.

The initial public offering (IPO) of Ahmedabad-based Harsha Engineers International, which manufactures precision bearing cages, has opened today, September 14, and will conclude on September 16.

The company plans to raise ₹755 crore through this IPO consisting of a fresh issue of equity shares worth ₹455 crore and an offer for sale by promoters of up to ₹300 crore.

Money raised through the IPO will be utilised for debt repayment, funding capital expenditure, purchase of machinery, infrastructure repairs, renovation of the existing production facilities and for general corporate purposes.

Ahead of its initial share sale, Harsha Engineers had raised ₹225.7 crore from anchor investors including American Funds Insurance Series Global Small Capitalization Fund, Goldman Sachs Funds - Goldman Sachs India Equity Portfolio, PineBridge Global Funds - PineBridge India Equity Fund and Abu Dhabi Investment Authority-Monsoon.

Investor demand for the IPO could be strong as the shares of the company are commanding a premium of ₹210 per share in the grey market. Grey market premium or GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges.

Some key details about the IPO:

Most analysts recommend subscribing to the IPO
The company’s business comprises two segments – engineering business and solar EPC business. Its engineering business manufactures bearing cages in brass, steel and polyamide materials; complex and specialised precision stamped components; welded assemblies and brass castings, among others.

“Harsha Engineers International with its dominant position is well placed to capture the growing bearing cage demand across industries. We like its increasing focus on other specialised precision components and on the growing EV segment which could boost its EBITDA margins,” said analysts at Motilal Oswal.

Its solar EPC business provides complete comprehensive turnkey solutions to all solar photovoltaic requirements.

“With increasing utilisation rates, turnaround in solar EPC business (6% of revenue) and debt being repaid, we expect return on capital employed (ROCE) to improve to 20% levels in a couple of years. We appreciate HEIL’s quality of business, industry positioning (industry leadership in India) and cash flow generation. We recommend subscribing to the issue,” said a report by Nirmal Bang.

The company’s profit grew by over four times in the last three financial years.


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