Divgi TorqTransfer Systems IPO Review: Divgi TorqTransfer Systems Limited is coming up with its Initial Public Offering. The IPO will open for subscription on March 1st, 2023, and close on  March 3rd, 2023. It is looking to raise up to ₹412 Crores. In this article, we will look at Divgi TorqTransfer Systems Limited IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! 

Divgi TorqTransfer Systems IPO Review– About The Company

Incorporated in 1964, Divgi TorqTransfer Systems Limited is engaged in the business of manufacturing automotive components. They are of the few players in India who develop and provide system-level transfer cases, torque couplers, and dual-clutch automatic transmission solutions.

They are also one of the leading suppliers of transfer case systems to automotive OEMs in India and are the only manufacturer of torque couplers in India

Services Provided by the company:

Divgi TorqTransfer Systems Limited has a diversified products portfolio that includes:

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  1. Torque transfer systems (which include four-wheel-drive (“4WD”) and all-wheel-drive (“AWD”) products)
  2. Synchronizer systems for manual transmissions and DCT
  3. Components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs

In addition, they have developed:

  1. Transmission systems for EVs
  2. DCT systems;
  3. Rear wheel drive manual transmissions

Divgi TorqTransfer Systems IPO Review – Financial Highlights

If we look at the financials of Divgi TorqTransfer Systems. we find out that their assets have grown from Rs. 303.70 crores in March 2020 to Rs. 430.21 crores in September 2022. Their revenues also follow a similar trend, it has grown from Rs. 170.74 crore in March 2020 to Rs. 241.87 crore in March 2022. As of September 2022, the company’s revenue stands at Rs 137.55 crores for FY22-23. 

Their profits have grown from Rs. 28.04 crore in March 2020 to Rs. 46.15 crores in March 2022. As of September 2022, the company’s profits stand at Rs 25.66 crores for FY22-23.  It is also important to note that the company’s borrowing has significantly decreased from Rs. 50.41 crores In March 2020 to Rs. 0.50 crores as of 30-Sep-22.

Balance of the company 

Source : Red Herring Prospectus of Divgi TorqTransfer Systems

Profit and loss Statement of the company

Source : Red Herring Prospectus of Divgi TorqTransfer Systems

Divgi TorqTransfer Systems IPO Review – Competitors

Following are the competitors of the company in each of its product verticals:

  • Transfer Case: Aisin, BorgWarner, Dana, Magna, Univance
  • Torque Coupler: Aisin, BorgWarner, Schaeffler, Valeo, ZF
  • Synchroniser Pack: Anand CY Myuteck Automotive, Natesan Synchrocones, Yugal Precision

Strengths of the Company

  • The company is one the few suppliers in India that develop and provide system-level transfer cases, DCT solutions, torque couplers, and transmission systems for EVs across a wide range of automotive vehicles and geographies. They also hold a leadership position across select product categories.
  • The company has strategically located manufacturing facilities that hold the capacity of producing high-precision components meeting system-level design intent.
  • The company maintained long-term relationships with large domestic and global customers.
  • The company consists experienced board of directors and a senior management team that is backed by a skilled and qualified workforce.
  • The company has maintained a consistent financial performance and also keeps its focus on its innovation and R&D capabilities.

Weaknesses of the Company

  • The company’s business is largely dependent on 5 key customers and losing any of these customers or a reduction in purchases by any of these players can have an adverse impact on the business.
  • The company’s inability to export or grow the business in certain countries in which they have geographical concentration will impact their business.
  • The disruption in the availability of raw materials and components or the changes in their prices will have an impact on the business
  • A disruption in the supply of raw materials and key components or the failure on behalf of suppliers and third-party logistics service providers to meet their obligations will have a significant impact on the business.

Divgi TorqTransfer Systems Review – Key IPO Information

ParticularsDetails
IPO Size₹412.00 Cr
Fresh Issue₹180.00 Cr
Offer for Sale (OFS)3,934,243 shares
Opening dateMarch 1, 2023
Closing dateMarch 3, 2023
Face Value₹5 per share
Price Band₹560 to ₹590 per share
Lot Size25 Shares
Minimum Lot Size1(25)
Maximum Lot Size13(325)
Listing DateMarch 14, 2023

Promoters: Jitendra Bhaskar Divgi, Hirendra Bhaskar Divgi And Divgi Holdings Private Limited

Book Running Lead Manager: Inga Ventures Private Limited, Equirus Capital Private Limited

Registrar to the Offer: Link Intime India Private Limited 

The Objective of the Issue

The net proceeds from this issue will be utilized for the following purposes:

  • For financing the capital expenditure requirements for the purchase of machinery and equipment at companies manufacturing facility
  • General corporate purposes

In Closing

In this article, we looked at the details of Divgi TorqTransfer Systems IPO Review 2023. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

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