The initial public offering (IPO) of leading precision bearing cage manufacturer Harsha Engineers International continues to attract a strong response from investors. On September 16, the last day of bidding, the offering was subscribed 57 times, with a bidding scale of 1.68 crore shares, totalling 96.7 crore shares.

Non-institutional investors responded strongly, subscribing at 65.3 times the quota, followed by retail investors at 16.18 times the quota.

Company employees also showed strong interest in the IPO, bidding 10.65 times the reserved portion. Shares worth Rs 2.5 crore have been reserved for company employees, who will receive a final price discount of Rs 31 per share.
The portion reserved for qualified institutional buyers was fully subscribed the day after Thursday’s IPO. On Friday, the last day, they bought 124.3 times their quota.

Harsha Engineers International, which has a 60% market share in India’s precision bearing cage manufacturing sector, plans to raise Rs 755 crore through an IPO. The IPO consisted of an issue of Rs 455 crore of new shares and a sale offer of Rs 300 crore from the promoters.

The newly issued funds will be used to repay debt, purchase machinery, infrastructure repairs and refurbishment of existing production facilities, including office premises in India, as well as for general corporate purposes. The offered range closed today at Rs 314-330 per share.

“In the higher price range, Harsha Engineers trades at 32.7 times earnings (FY22), which appears to be a reasonable price compared to its peers,” Geojit Securities said.

The brokerage has a medium-to-long-term buy rating given its strong financials and market share, the “China plus one” strategy in major economies, and the growing trend of outsourcing from bearing manufacturers.

Harsha Engineers is also one of the world’s leading manufacturers of precision bearing cages, with a market share of 6.5%. It caters to customers with over 50% global market share in the bearing industry. They also have a solar EPC business (6% of revenue) that provides turnkey solutions for all solar PV needs.

Choice Broking also found the issue attractively priced. Hence, the brokerage has given a Buy rating on the issue, given the future growth prospects of the bearing market—Harsha Engineers’ dominant position in the bearing cage market and the required attractive valuation.