IPO Update: Harsha Engineers files draft papers with Sebi to raise Rs 755 cr

Harsha Engineers International Limited, an Ahmedabad-based manufacturer of precision bearing cages, is planning an initial public offering to generate up to Rs 755 crore (IPO). The company has submitted a draught red herring prospectus (DRHP) to the Securities and Exchange Commission.

The company is planning a fresh issue of shares worth Rs 455 crore and a sale of shares worth Rs 300 crore. The OFS comprises up to Rs 66.75 crore by Rajendra Shah, up to Rs 75 crore by Harish Rangwala, up to Rs 16.50 crore by Pilak Shah, up to Rs 75 crore by Charusheela Rangwala and up to Rs 66.75 crore by Nirmala Shah. A part of the shares will be set aside for employees, who will be able to purchase them at a lower price than the issue price.

According to the draught paperwork, Harsha Engineers, India’s largest manufacturer of precision bearing cages in terms of sales in the organised sector, may consider raising Rs 90 crore before submitting the IPO papers with the Registrar of Companies. If the pre-IPO placement is successful, the amount of the new issue will be proportionately lowered.

In 2020, it will have roughly 50% market share in the Indian organised bearing cages market and 5.2 percent market share in the global organised bearing cages market for brass, steel, and polyamide cages, according to the company.

Complex and specialised precision stamped components, welded assemblies, brass castings and cages, and bronze castings and bushings are also produced by the company. It has five manufacturing facilities: two in Gujarat, near Ahmedabad, at Changodar and Moraiya, and one each in China and Romania, at Changshu and Ghimbav Brasov. Customers may be found in 25 countries across North America, Europe, Asia, South America, and Africa.

The proceeds from the new issue would be used for debt repayment up to Rs 270 crore, working capital requirements for the purchase of machinery up to Rs 77.95 crore, infrastructure repairs and upgrading of existing production facilities up to Rs 7.12 crore, and general corporate purposes.

Harsha Engineers reported a profit of Rs 45.44 crore and revenue of Rs 873.75 crore for FY21, with two-thirds of revenue coming from outside India over the preceding three fiscal years, compared to a profit of Rs 21.9 crore and revenue of Rs 885.85 crore the previous year. It made a profit of Rs 43.7 crore on revenue of Rs 629.46 crore in the six months ended September 2021.

During the period 2021-2029, India’s bearings market is predicted to develop at the highest CAGR of 7.9% in the Asia Pacific region, reaching $9 billion in 2029.

The issue’s book running lead managers are Axis Capital, Equirus Capital, and JM Financial.