Uniparts India likely to see single-digit listing gain, suggests grey market premium

Uniparts India, whose Rs 835.61 crore IPO ran from November 30 to December 12, is likely to see a decent market debut on Monday, grey market trends suggest. The IPO was commanding a grey market premium (GMP) of Rs 51 over the issue price of Rs 577, hinting at a 9 per cent listing pop later at 10 am.

The Uniparts India IPO was a hit, with qualified institutional buyers bidding 67.14 times the quota reserved for the investor category. The quota reserved for non-institutional buyers was subscribed 17.86 times while that of retail individual investors was subscribed 4.63 times.

The IPO commanded GMP as high as Rs 140 and as low as Rs 45 recently.

Ventura Securities, which had a 'subscribe' rating for the Uniparts India IPO, set a base 18-month price target of Rs 711 for the stock, suggesting an upside of 23.2 per cent over the IPO price.  The domestic brokerage has a bull case target of Rs 964 (67 per cent potential upside) and a bear case target of Rs 449 (22.2 per cent potential downside) for the stock.

With the gradual recovery in the global economy, rising infrastructure spend in the US, increase in farm income, shift in manufacturing to India, Ventura said Uniparts can deliver revenue growth of 12.5 per cent, Ebitda growth of 12 per cent and PAT growth of 13.5 per cent, over FY22-25 in its base case scenario.

Ventura sees sales in FY25 at Rs 1,747 crore, Ebitda at Rs 377 crore and PAT at Rs 247 crore. That said, it sees Ebitda margin falling 26 bps to 21.6 per cent by FY25 due to input cost pressure. Net margin is expected to improve by 40 bps to 14.2 per cent due to the reduction in debt burden.

Uniparts India is a global manufacturer of engineered systems and solutions and is one of the leading suppliers of systems and components for the off-highway market in the agriculture and construction, forestry and mining (“CFM”) and aftermarket sectors on account of their presence across over 25 countries.

The company is a concept-to-supply player for precision products for off-highway vehicles with presence across the value chain. The company’s product portfolio includes core product verticals of 3-point linkage systems and precision machined parts as well as adjacent product verticals of power take off, fabrications and hydraulic cylinders or components thereof.

Nirmal Bang Securities in its IPO note said Uniparts has demonstrated its scalability and execution with the top line growth at 12 per cent CAGR over FY17-22 and has scaled revenue of Rs 1,227 crore in FY22. The company has reduced debt from Rs 330 cr in FY19 to Rs 83 crore as of June 2022, which has helped Uniparts to improve its bottom line performance, it said.

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