Harsha Engineers IPO Review – Should you Subscribe?

Ahmedabad based Harsha Engineers International Limited is coming up with an IPO, which would open for subscription on 14th September, 2022. Harsha Engineers is India’s largest manufacturer of precision bearing cages, in terms of revenue. Its revenues and margins are improving year on year. Should you invest in Harsha Engineers IPO? What are the risk factors in this IPO? In this article we would provide Harsha Engineers International Limited IPO Review with detailed analysis.

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About Harsha Engineers International Limited

The company is the largest manufacturer of precision bearing cages, in terms of revenue in the organized sector in India. It is also amongst the leading manufacturers of precision bearing cages in the world.

The company offers a diversified suite of precision engineering products across geographies and end-user industries.

Its business comprises:

(i) engineering business, under which they manufacture bearing cages (in brass, steel and polyamide materials), complex and specialized precision stamped components, welded assemblies and brass castings and cages & bronze bushings

(ii) Solar EPC business, under which they provide complete, comprehensive turnkey solutions to all solar photovoltaic requirements.

Company have approximately 50-60% of the market share in the organised segment of the Indian bearing cages market and 6.5% of the market share in the global organised bearing cages market for brass, steel and polyamide cages. They offer a wide range of bearing cages starting from 20 mm to 2,000 mm in diameter and our bearing cages find its application in the automotive, railways, aviation & aerospace, construction, mining, agriculture, electrical and electronics, renewables sectors etc.

Harsha Engineers IPO - Dates, Size, Review, Analysis, Buy or not, Invest or avoid

Harsha Engineers IPO – Dates, Issue details, Size and Price Band

Here are the issue details.

IPO Opening Date 14-Sep-22
IPO Closing Date 16-Sep-22
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 314 to Rs 330 per equity share
Lot Size 45 Shares
Min Order Quantity 45 Shares
Listing at BSE and NSE
Total Issue Size Rs. 755 Crores
    Fresh issue     Rs. 455 Crores
    OFS     Rs. 300 Crores

Harsha Engineers IPO RHP

Competitive strengths of Harsha Engineers

1) Company is a comprehensive solution provider offering a diversified suite of precision engineering products across geographies and end-user industries.

2) It has long-standing relationships with leading clientele.

3) It has strategically located domestic and international production facilities and warehouses.

4) Company has expertise in Tooling, design, development and automation.

5) Company has a consistent track record of growth and financial performance.

6) It has strong, experienced and dedicated senior management team and qualified workforce.

What are the Objects of the IPO Offer?

Harsha Engineers IPO Size is Rs 755 Crores which consists of Offer for Sale (OFS) and fresh issue.

i) Offer for Sale (OFS) for Rs 300 Crores: Under OFS, selling share holders would sell their shares and the company would not get any benefit.

ii) Fresh issue for Rs 455 Crores: The Fresh proceeds of the offer would be used for the following:

(a) Pre-payment or scheduled repayment of a portion of the existing borrowing availed by the company.

(b) Funding capital expenditure requirements towards purchase of machinery.

(c) Infrastructure repairs and renovation of existing production facilities including office premises in India.

(d) General corporate purposes.

Who are the promoters of Harsha Engineers?

Rajendra Shah, Harish Rangwala, Vishal Rangwala, and Pilak Shah are the promoters of the company.

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How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 4 years.

Financial Year ending / Period ending (Amt in Crores)
Particulars FY19 FY20 FY21 FY22
Total Assets 195.0 973.2 981.1 1,158.3
Revenues 117.9 899.5 876.7 1,339.0
Profit After Tax -27.4 21.9 45.4 91.9
Profit % -23.25% 2.44% 5.18% 6.87%

Performance Indicators of Harsha Engineers Vs. its peers for FY2022

Harsha Engineers IPO - Comparison of Key Performance Indicators for FY22 with competitors

Positive Factors in Harsha Engineers IPO

Here are the key reasons to invest in this IPO.

1) Harsha Engineers International Limited is the largest manufacturer of precision bearing cages in India in terms of revenue in the organized sector and amongst the largest manufacturer in the world.

2) Company offers a diverisified suite of precision engineer products across geos and end user industries with long standing relationship with leading clients.

3) Company has generated good revenue growth in the last 4 years. Its revenues grew from Rs 117.9 Crores in FY19 to Rs 1,339 Crores in FY22.

4) Good improvement in the margins. It incurred loss of Rs 27.4 Crores in FY19 Vs. 91.9 Crores profit in FY22. Its profits on revenue have been increasing year on year in the last 3 years (2.4% in FY20, 5.1% in FY21 and 6.87% in FY22).

Risk or Negative Factors in Harsha Engineers IPO

1) Objects of the offer include Offer for Sale (OFS). These proceeds would go to selling shareholders and company would not benefit from this.

2) Company return on average equity is 19% compared to its competitors ROE of 22% to 29%.

3) Current covid-19 outbreak has caused disruptions in India and the global economy and such impact on company business is uncertain and cannot be predicted.

4) Company depends on a limited number of customer groups for significant portion of its revenues from engineering business. Any loss in such customer groups can have an adverse impact on the business.

5) Company is dependent on its network of agents for the fulfillment of the needs of its customers. Company inability to maintain its relationships with its agents can affect its business.

6) It has recently completed corporate re-org, pursuant to which it may face administrative and operational difficulties.

7) Since company exports the products, there is foreign exchange rate fluctuation risk.

8) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

Harsha Engineers International IPO valuation

Harsha Engineers IPO price band is Rs 314 – 330 per share.

1) If we consider last 3 years weighted average EPS of Rs 8.5 and the upper price band of Rs 330, P/E works out to 39x.

2) Similarly, if we consider FY2022 EPS of Rs 11.09 and the upper price band of Rs 330, P/E works out to be 30x.

3) Means company is asking the upper band of IPO price of Rs 330 in the P/E ratio of 30x to 39x.

As per the RHP, there are listed peers like Timken India trading at P/E of 69x (Highest) and Rolex Rings at P/E of 36x (Lowest). Hence Harsha Engineers International IPO price at Rs 330 is reasonably priced.

Harsha Engineers IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 14-Sep-22
Offer close 16-Sep-22
Finalization of Allotment 21-Sep-22
Initiation of Refunds 22-Sep-22
Credit to Demat Account 23-Sep-22
IPO Shares Listing Date 24-Sep-22

How to buy Harsha Engineers IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to the console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Harsha Engineers IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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What is Harsha Engineers IPO GMP today?

Harsha IPO GMP today as per leading experts is in the range of Rs 190-200 per share.

Harsha Engineers IPO GMP ipowatch – Rs 150 per share

Harsha Engineers GMP IPO Central – Rs 60 per share

Harsha Engineers IPO GMP Chanakya – Rs 152-156 per share

Harsha Engineers IPO Review – Should you Invest or not?

Harsha Engineers International Limited is the largest manufacturer of precision bearing cages in India and amongst the world.

Subscribe to the IPOCompany generated good revenue growth in the last 4 years.

Company margins are improving year on year.

Its issue price is reason priced.

Considering all these positive factors and negative factors indicated above, investors can invest in this IPO for medium to long term perspective.

FAQs on Harsha Engineers International Limited IPO

What are Harsha Engineers ipo dates?

The IPO would open for subscription on 14th September, 2022 and closes on 16th September, 2022.

What is Harsha Engineers IPO Price?

The IPO Price band is Rs 314 to Rs 330 per share.

What is Harsha Engineers IPO Lot Size?

The IPO Lot size is 45 shares and in multiple of 45 shares each.

What is Harsha Engineers IPO premium (GMP) today?

The shares are actively trading and as per leading observers, these are trading at a premium (GMP) of Rs 190-200 per share.

Is Harsha Engineers IPO good or bad for investment?

Company has good revenue growth in the last 4 years. The margins are improving year on year. Its issue price is reasonably priced. One can consider these aspects and invest in the IPO.

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Suresh KP

One comment

  • Sanjeev

    Thank you Suresh ji, excellent analysis done by you, as usual. Is this company is debt free?and what will be promoters shareholding on listing? Please confirm.

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