The initial public offering (IPO) of engineered systems and solutions provider Uniparts India was 25.3 times subscribed on December 2, the last day for bids. The IPO received bids for 1.01 crore of the 25.64 crore shares.

The portion reserved for retail investors was 4.59 times subscribed, while the portion reserved for high-net-worth individuals (HNIs) is 17.85 times subscribed. The quota reserved for qualified institutional buyers was subscribed 67.14 times.

The company plans to raise Rs 835.6 crore in the IPO, from sale offers from promoters and investors. The price range for the offer is Rs 548-577 per share.

Investors Ashoka Investment Holdings and Ambadevi Mauritius Holding will exit the company by selling their 71.8 lakh and 21.54 lakh shares through public offerings. The promoter’s stake will drop below 66%. Most brokerages have a “subscribe” rating on this IPO, citing its healthy financial performance and attractive valuation.

Uniparts India is a leading systems and components supplier to the agriculture, construction, forestry, mining and aftermarket off-highway vehicle markets with six manufacturing plants (5 in India and 1 in the US). It operates in more than 25 countries.

“The company intends to expand into new geographies and adjacent product verticals, gain additional customer accounts and increase the share of wallet among existing customers. It also plans to grow inorganically through strategic acquisitions and alliances. Compared to listed peers, this issue seems to be that pricing is right,” said Anand Rathi, who recommends a “subscribe-long term” rating on the IPO.

Uniparts’ product portfolio includes the core verticals of Three Point Links (3PL) and Precision Machined Parts (PMP), as well as adjacent verticals of Power Take-Off (PTO), Manufacturing and Hydraulic Cylinders or Assemblies.

Demand for PMP products is expected to grow at CAGRs of 6% and 8% during FY21-26, driven by strong growth in construction equipment production in major markets such as Japan and Europe. “This may provide more opportunities for the company to expand its business,” Reliance Securities said.

The brokerage further said that increasing mechanisation in the agriculture and CFM (construction, forestry and mining) industries would allow the company to effectively serve original equipment manufacturers (OEMs) across multiple chains and asset/working capital management rationalisation.

Reliance Securities recommends a “Subscribe” on the issue given its healthy financial profile, strong global presence, systems and components supply leadership, growth opportunity in the PMP and 3PL markets, and attractive valuation.

Uniparts India has delivered healthy revenue growth at a CAGR of 15% between FY20 and FY22. During the same period, EBITDA and PAT grew at a CAGR of 67% and 63%, respectively. EBITDA margin expanded from 10.6% in FY20 to 21.8% in FY22.