The shares of Harsha Engineers International (HEIL) made a strong market debut today. The stock listed at ₹450 per share vs its issue price of ₹330 per share, a premium of 36.36 percent on the NSE. Meanwhile, on BSE, it listed at a premium of 34.55 percent at ₹444. The ₹755-crore initial public offering of Harsha Engineers opened for subscription on September 14 and closed on September 16. The company had fixed the IPO price band at ₹314-330 per share.
The stock hit a high of ₹463 on BSE in intra-day deals, up over 40 percent from its issue price.
The Harsha Engineers IPO has received one of the strongest investor responses so far this year. The IPO was subscribed 74.7 times as it closed on September 16. The issue received bids for 125.97 crore shares against the 1.69 crore shares up for bidding, data on the Bombay Stock Exchange (BSE) showed.
The quota for Qualified Institutional Buyers (QIBs) was subscribed 178.26 times, while the portion for non-institutional investors received 71.32 subscriptions. The category for Retail Individual Investors (RIIs) got subscribed 17.63 times.
The IPO consisted of a fresh issue of equity shares aggregating to ₹455 crore, and an offer-for-sale (OFS) of up to ₹300 crore by existing shareholders.
Harsha Engineers International Ltd (HEIL) is the largest manufacturer of precision bearing cages (critical component within bearings), in terms of revenue, in organised sector in India (60 percent market share), and among the leading manufacturers of precision bearing cages in the world (6.5 percent market share).
HEIL’s revenue from operations grew from ₹886 crore to ₹1,322 crore at a CAGR of 22 percent between FY20 and FY22 and its PAT grew by 105 percent CAGR from ₹22 crore to ₹92 crore in the same period.
Most brokerages had given a subscribe rating to the issue on the back of solid financials and reasonable valuation.
Considering its strong financials and market share, the China-plus-one strategy by major economies and the growing outsourcing trend of bearing manufacturers, Geojit Financial Services assigned a “Subscribe” rating on a medium to long-term basis. At the upper price band of ₹330, HEIL is available at a P/E of 32.7x (FY22), which appears reasonably priced compared to peers, it added.
HEIL with its dominant position is well placed to capture the growing bearing cage demand across industries. MOSL likes its increasing focus on other specialized precision components and on the growing EV segment which could boost its EBITDA margins, said another brokerage Motilal Oswal. Given growth recovery in auto/auto ancillary and strong momentum in the midcaps, MOSL expects the stock to do well.
