The initial public offering (IPO) of engineering systems and solutions provider firm Uniparts India opened for public subscription on November 30 and will close on December 2.
The company has decided to allot 43.44 lakh equity shares to anchor investors at ₹577 apiece, with a total transaction size of ₹250.68 crore.
Axis Capital, DAM Capital Advisors and JM Financial are the book-running lead managers to the issue.
Nomura, Morgan Stanley, BNP Paribas, HDFC Mutual Fund (MF), Aditya Birla Sun Life MF, Invesco MF, Mahindra MF, Carnelian Capital, Bajaj Allianz Life Insurance Company and Aditya Birla Sun Life Insurance Company are among the anchor investors.
Here's all you need to know about the new offer.
What are the key dates?
The IPO opened for public subscription on November 30 and will close on December 2. It opened for anchor investors a day before on November 29. Shares of the company will be listed on the stock exchanges on December 12.
What is the issue size?
The public issue is entirely an offer for sale (OFS) of 14,481,942 equity shares of ₹10, aggregating up to ₹836 crore. Since it is an OFS, the company will not receive any proceeds from the offer. The proceeds will go to the selling shareholders.
Those offering shares in the OFS are promoter group entities -- The Karan Soni 2018 CG-NG Nevada Trust, The Meher Soni 2018 CG-NG Nevada Trust, Pamela Soni -- and investors -- Ashoka Investment Holdings Ltd and Ambadevi Mauritius Holding Ltd.
What is the lot size?
The lot size of this IPO is 25 shares which means investors can apply for a minimum of 25 shares and after that, in multiples of 25 shares.
Half of the OFS is reserved for qualified institutional buyers (QIBs) while 15 percent is for high-net-worth individuals (non-institutional investors), and the remaining 35 percent is reserved for retail investors.
What does the firm do?
Uniparts is a global manufacturer of engineered systems and components for the off-highway market in agriculture, forestry, construction, mining, etc. with a presence across over 25 countries.
Its core product portfolio includes (i) 3-point linkage systems, or 3PL, and (ii) precision machined parts, or PMP, brokerage firm Nirmal Bang pointed out.
Gurdeep Soni and Paramjit Singh Soni are the promoters of the company.
How has the company's financial performance been?
Brokerage firm Anand Rathi Share and Stock Brokers highlighted that over the years, the company’s revenue from operations has remained stable despite the impact of the Covid-19 pandemic on their business operations.
The revenue from operations were ₹9,072.20 million, ₹9,031.42 million, ₹12,274.24 million, and ₹3,468.41 million in fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022, respectively.
Their EBITDA was ₹1,278.10 million, ₹1,639.27 million, ₹2,716.63 million, and ₹761.16 million in fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022, respectively, while their EBITDA margin was 14.09 percent, 18.15 percent, 22.13 percent and 21.95 percent, respectively, for these periods.
Uniparts India has a healthy balance sheet position with a net worth of ₹ 7,139.31 million as of June 30, 2022, and has been able to maintain a low debt position, said Anand Rathi.
Should you buy the IPO?
Many brokerage firms have positive views on the IPO because of reasonable valuation against the company's long-term growth prospects.
Brokerage Anand Rathi recommends buying it for the long term.
"The company is available at the upper end of the IPO price band at 15.6x its FY22 earnings attributable to post-issue equity demanding a market cap of ₹26,042.2 million. At the upper end of the IPO price band, the issue is priced at a P/BV of 3.6 times based on its NAV of ₹158.2 as of June 30, 2022," said Anand Rathi.
"The company intends to expand into newer geographies, and adjacent product verticals, acquire additional customer accounts and increase the wallet share of existing customers. It also plans to grow inorganically through strategic acquisitions and alliances. When compared to its listed peers, the issue appears to be reasonably priced. We recommend a 'subscribe-long term' rating to this IPO," the brokerage firm said.
ICICI Direct has also assigned a 'subscribe' rating on the IPO considering healthy financials, precision component product profile and inexpensive valuations.
"At the upper end of the price band it is valued at nearly 15.6 times P/E on FY22, which we believe is reasonable given the healthy financials at the company and high single-digit growth prospects across its key serving segments (3PL and PMP)," said ICICI Direct.
Brokerage Nirmal Bang also has a 'subscribe' rating on the IPO.
Nirmal Bang highlighted that the company has reduced its debt from ₹330 crore in FY19 to ₹83 crore as of June 2022, which has helped Uniparts improve its bottom line performance.
"A global player of engineered systems and components for the off-highway market in the agriculture, CFM and aftermarket, is anticipated to increase its market share from present 8 percent in higher than 70 HP segment. We believe Uniparts is being offered at reasonable valuations at 15.6 times FY22 earnings considering peer valuations and future growth opportunities in the 3-PL and PMP industry," said Nirmal Bang.
Disclaimer: The views and recommendations given in this article are those of the broking firms. These do not represent the views of MintGenie.