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Harsha Engineers IPO Review: Harsha Engineers International Limited is coming up with its Initial Public Offering. The IPO will open for subscription on September 14th, 2022, and close on September 16th, 2022. It is looking to raise Rs 755 Crores out of which Rs 455 Crores will be a fresh issue and the rest Rs 300 Crores will be an offer for sale.

In this article, we will look at the Harsha Engineers IPO Review and analyze its strengths and weaknesses. Keep reading to find out! 

Harsha Engineers IPO Review – About The Company

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Harsha Engineers International Limited is the largest manufacturer of precision bearing cages, in terms of revenue, in the organized sector in India, and among the leading manufacturers of precision bearing cages in the world.

The company had a  50-60% of the market share in the organized segment of the Indian bearing cages market and 6.5% of the market share in the global organized bearing cages market for brass, steel, and polyamide cages as of FY2021.

The products of the company are used in the automotive, railways, aviation & aerospace, construction, mining, agriculture, electrical and electronics, and renewables sectors among others.

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Harsha Engineers IPO Review - Total assets

The company is also an EPC service provider in the solar photovoltaic industry and also provides operations and maintenance services in the solar sector. Their solar EPC business is broadly classified into Ground mount projects, Rooftop projects, and Operations and maintenance of ground mount and rooftop projects.

As on March 31, 2022, their aggregate installed capacity across their 4 manufacturing facilities was 4,596 metric tonnes per annum for castings and 1,097.87 million pieces per annum for bearing cages.

The products portfolio of the company includes:

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  • Bearing Cages
  • Steel Cages
  • Brass Cages
  • Polyamide Cages
  • Bronze Bushes for Sliding bearing
  • Speciality Components

Harsha Engineers IPO Review – Financial Highlights

Harsha Engineers IPO Review - Financials
Financials 2

(Source: DRHP of the company)

Harsha Engineers IPO Review – Industry Overview

The global bearings market was valued at USD 85.2 billion in 2015 and grew at an annual rate of 12% to USD 104.6 billion in 2021 despite being affected by the contraction in demand and supply caused by the outbreak of Covid 19 pandemic. 

The bearings market is expected to grow at a CAGR of 6% to 8% from 2021 to 2029 and is estimated to be valued at USD 171.7 billion in the year 2029.

In terms of revenue, the bearings market in India accounted for a share of about 5.2% of the global bearings market in 2021. The Indian bearings market grew at a CAGR of 7.2% from 2015 to 2019. Further, it is expected to grow at a CAGR of 8.3% from 2021 to 2029 and is estimated to be valued at USD 10.3 billion in 2029.

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The global bearing cages market was valued at USD 4,261.5 million and grew at a CAGR of 5.6% between 2015 and 2019. It is further expected to grow at a CAGR of 6% to 8% over the period 2021 to 2029 and is estimated to be valued at USD 8,583.5 million in the year 2029.

Strengths of the Company

  • The company has a diversified product portfolio in terms of the materials used as well as the dimensions and end-use of the finished products.
  • The company has 4 strategically located manufacturing facilities spread across three countries in India, China, and Romania.
  • The company has a decade of experience in tooling, design development, and automation of its product.
  • The company has a strong, experienced, and dedicated senior management team and a qualified workforce.
  • The company has a consistent track record of growth and financial performance.

Weaknesses of the Company

  • The company is dependent on a limited number of customers for a significant portion of its revenues.
  • The functioning of the business is dependent on third parties such as Agents, Suppliers. Any change in relations can disrupt the business.
  • The company is subject to various laws, regulations, approvals, and licenses required in the ordinary course of business, including environmental, health, and safety laws and other regulations.
  • The company is exposed to certain inherent risks such as Technological risk and Foreign currency fluctuations risk.
  • There are certain litigations that are pending against the company and its directors. 

Grey Market Information

The shares of Harsha Engineers traded at a premium of  66.67% in the grey market on September 12th. The shares traded at Rs 550. This gives it a premium of Rs 220 per share over the cap price of Rs 330. 

Key IPO Information

ParticularsDetails
IPO Size₹ 755 Crores
Fresh Issue₹ 455 Crores
Offer for Sale (OFS)₹ 300 Crores
Opening dateSeptember 14, 2022
Closing dateSeptember 16, 2022
Face Value₹ 10 per share
Price Band₹ 314 to ₹ 330 per share
Lot Size45 Shares per lot
Minimum Lot Size13 (585 shares)
Maximum Lot Size2 (45 shares)
Listing DateSeptember 26, 2022

Promoters: Rajendra Shah, Harish Rangwala, Vishal Rangwala and Pilak Shah 

Book Running Lead Managers: Axis Capital Limited, Equirus Capital Private Limited, and Jm Financial Limited 

Registrar To The Offer: Link Intime India Private Limited

The Objective of the Issue

The Net Proceeds from the Fresh Issue are proposed to be utilized for: 

  • Pre-payment or scheduled repayment of a portion of the existing borrowing availed by the Company.
  • Funding capital expenditure requirements towards the purchase of machinery.
  • Infrastructure repairs and renovation of the existing production facilities including office premises in India.
  • General corporate purposes.

In Closing

In this article, we looked at the details of Harsha Engineers 2022. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for the 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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