Harsha Engineers International (HEIL) made a strong stock market debut, with its shares listed at Rs 450, a 36 per cent premium over its issue price of Rs 330 on the National Stock Exchange (NSE) on Monday in an otherwise weak market. On the BSE, the stock listed at Rs 444, 35 per cent higher against its issue price.
Post listing, the stock moved 45 per cent higher to Rs 480 on the NSE and BSE. At 10:09 am, HEIL traded at Rs 477, a solid gain of 44 per cent when compared to its issue price. The counter witnessed trades of around 20 million shares on the NSE and BSE. In comparison, the S&P BSE Sensex was down 1.55 per cent at 57, 200.
The initial public offering (IPO) of HEIL had received robust response with the issue subscribed 74.70 times. The qualified institutional buyers (QIBs) category was subscribed 178.26 times. The non institutional investors (NIIs) category was subscribed 71.32 times and the retail individual investors (RIIs) category was subscribed 17.63 times.
HEIL is a leading engineering company that offers a diversified suite of products across geographies and end-use industries. It manufactures brass, steel and polyamide cages and stamped components with production facilities in Asia (India & China) and in Europe (Romania). HEIL’s market share is estimated to be ~50-60 per cent in the Indian bearing cages market making it the largest manufacturer of precision bearing cages in the organised sector in India.
During FY20-22, HEIL registered CAGR revenue, EBITDA and PAT growth of 22.1 per cent, 40.2 per cent and 104.9 per cent, respectively. Looking at the current economic scenario and demand in bearing space it is expected to perform on similar lines, according to analysts at ICICI Securities.
Exports contribute more than 60 per cent of revenue. Any significant global slowdown can impact growth prospects. The exposure to foreign currency exchange rate fluctuations which can be cause HEIL’s quarterly results to fluctuate significantly. Inability to successfully diversify the product offerings of its engineering business are key risks and concerns, the brokerage firm said in IPO note.
HEIL is operating in a niche and fragmented bearing cages market which requires high degree of precision with an impressive domestic market share of 50-60 per cent and 6.5 per cent global market share, accompanied by its ability to provide customized and innovative solutions to global bearing players, analyst at Anand Rathi Share and Stock Brokers said.
With over 35 years of operating history in the precision bearing cages market, brightening outlook of global automobile sector, high degree of focus on manufacturing complex and specialized precision stamped components, robust revenue & profit growth of 22 per cent and 105 per cent in the last three years we believe that HEIL is well-placed to capture growth recovery in the auto/auto ancillary sector, the brokerage firm said.