Sona Comstar will launch its initial public offering (IPO) today. The auto component maker plans to raise Rs 5,550 crore through the share sale. The IPO comprises fresh issue of shares amounting to Rs 300 crore and an offer for sale (OFS) aggregating up to Rs 5,250 crore by selling shareholder Singapore VII Topco III Pte Ltd, an affiliate of the Blackstone Group Inc.
The price band for the IPO has been fixed at Rs 285-291. The share sale will close on June 16.
On Friday, the firm raised Rs 2,498 crore from anchor investors, the third largest anchor book size ever after SBI Cards and Payment Services and PowerGrid InvIT. The amount raised is 45 per cent of the total IPO size of Rs 5,550 crore.
SBI Cards and PowerGrid InvIT had raised Rs 2,769 crore and Rs 3,480 crore, respectively from anchor investors.
The firm allocated a total of 8.6 crore equity shares to 42 anchor investors at Rs 291 apiece.
42 anchor investors participated in the anchor book who included 24 foreign portfolio investors, 11 domestic mutual funds, 5 life insurance companies and 2 alternative investment funds (AIFs).
Government of Singapore Investment Corporate (GIC) and Monetary Authority of Singapore (MAS) together made a large investment of Rs 401.5 crore in the anchor book.
The Blackstone-promoted firm plans to use the proceeds from the IPO to repay/prepay a little over Rs 241 crore of its borrowings besides general corporate purposes.
Qualified institutional buyers will be allocated a total of 75 per cent of the issue size, 15 per cent is reserved for non-institutional bidders and 10 per cent will be allocated for retail investors.
Allotment of shares is likely to be held on June 21. The stock will be listed on BSE and NSE on June 24.
The lot size of IPO is 51 shares for which investors will have to spend Rs 14,841.
One can bid for a maximum 13 lots comprising 663 shares with an amount of Rs 1,92,933.
Sunjay Kapur, Sona Autocomp Holdings Private Limited and Singapore VII Topco III Pte. Ltd are promoters of the company. After the IPO, shareholding of the promoters will fall from 100% to 67.30%.
Kotak Mahindra Capital Company, Credit Suisse Securities, JP Morgan India, JM Financial and Nomura Financial Advisory and Securities are the book running lead managers (BRLM) of the issue.
Here's a look at what analysts and brokerages said about the prospects of the IPO.
LKP Securities in a note gave a subscribe rating to the IPO.
"Despite its rich valuations, considering its visibility of topline growth, competitive edge, superior profitability as compared to peers, prudent cost management, return ratios, wide clientele spread across the globe, sound R&D base and technological progress, we recommend investors to SUBSCRIBE to this IPO of Sona Comstar for long-term."
AR Ramachandran, Co-founder & Trainer, Tips2Trades recommends subscribing to the IPO for listing gains.
"Consistent revenues and profit margins with an efficient record of being among the top 10 automotive component manufacturers make Sona Comstar a decent buy. However, given its high PE ratio of more than 41 times and a correction expected in majority of the stocks, investors should trade only for listing gains. New investors should wait for at least a 10-15% correction to enter this stock post listing."
Marwadi Shares and Finance has given a subscribe call to the IPO.
"Considering the FY 21 adjusted EPS of 3.69 on a post-issue basis, the company is going to list at a PE of 78.9X with a market cap of Rs 1,69,737 million while its listed peers namely Motherson Sumi and Minda Industries are trading at a PE of 73.7X and 196.0X. We recommend to 'Subscribe' to this IPO as the company is a global player in critical auto components with a thrust on the EV segment and has a strong financial track record of growth and profitability," said the brokerage.
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