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Harsha Engineers IPO to open on Wednesday: Brokerage view, grey market premium and other details

Harsha Engineers IPO to open on Wednesday: Brokerage view, grey market premium and other details

Harsha Engineers' public issue consists of a fresh issue of equity shares aggregating to Rs 455 crore and an offer-for-sale (OFS) of up to Rs 300 crore by existing shareholders.

Harsha Engineers has fixed the IPO price band at Rs 314-330 per share for the Rs 755 crore initial share offer. Harsha Engineers has fixed the IPO price band at Rs 314-330 per share for the Rs 755 crore initial share offer.

The upcoming initial public offering (IPO) of Ahmedabad-based Harsha Engineers International will open for subscription on September 14 and conclude on September 16. The precision bearing cage manufacturer's public issue consists of a fresh issue of equity shares aggregating to Rs 455 crore and an offer-for-sale (OFS) of up to Rs 300 crore by existing shareholders.

As a part of the OFS, the company's promotors and promoter groups -- Rajendra Shah, Harish Rangwala, Pilak Shah, Charusheela Rangwala and Nirmala Shah -- will sell shares. The OFS offer also includes a reservation for subscription by eligible employees.

This is the company's second attempt to go public. It had filed its draft papers with the regulator in August 2018 but later shelved the proposal due to the IL&FS crisis, which shook the NBFC (non-banking financial company) sector.

IPO price band:

Harsha Engineers has fixed the IPO price band at Rs 314-330 per share for the Rs 755 crore initial share offer. Half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.

Investors can bid for a minimum of 45 equity shares and in multiples of 45 equity shares thereafter.

Brokerage view:

At the higher price band of Rs 330, the company "is valued at 27.7x FY22 earnings", which in our view is reasonable compared to its peers. Harsha Engineers, with its strong market share in precision bearing cages and being one of the leading players globally, provides healthy return ratios and visibility going ahead, said LKP Research.

"We recommend investors to 'Subscribe' to the IPO," it added.

Grey market premium:

Market participants said Harsha Engineers IPO grey market premium (GMP) is around Rs 200. It implies that the grey market is expecting the lender to list around Rs 530 (Rs 330 + Rs 200), which is more than 60 per cent to the IPO's upper band price of Rs 330 per equity share.

Harsha Engineers' revenue from operations climbed 51.24 per cent to Rs 1,321.48 crore for fiscal 2022, from Rs 873.75 crore for fiscal 2021, while profit after tax doubled to Rs 91.94 crore for fiscal 2022, from Rs 45.44 crore for fiscal 2021.

Axis Capital, Equirus Capital and JM Financial are the book-running lead managers to the issue.