Published on 14/09/2022 4:04:16 PM | Source: ShareKhan

IPO Note - Harsha Engineers International Limited By ShareKhan

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About the IPO

Harsha Engineers International Ltd (HEIL) is coming out with an initial public offer (IPO), consisting fresh issue of Rs. 455 crore and an offer for sales (OFS) of Rs. 300 crore, aggregating to a total issue size of Rs. 755 crore. The price band for the said issue is Rs. 314-330 per share. At the lower and upper price band, OFS is of 1.48-1.51 crore shares.

Objects of the issue

The key objects of the net proceeds of the fresh issue are to partly utilise the funds for pre-payment or repayment of existing borrowings availed by the company, fund its capital expenditure towards purchase of machinery, infrastructure repairs and general corporate purposes.

About the company

Harsha Engineering International Limited (“HEIL”) is the largest manufacturer of precision bearing cages among organised players, in terms of revenues, and is among the leading manufacturers of precision bearing cages in the world. HEIL offers diversified suite of precision engineering products across geographies and end-user industries.

Company’s business comprises:

* Engineering business, under which HEIL manufactures bearing cages (in brass, steel and polyamide materials), complex and specialised precision-stamped components, welded assemblies and brass castings and cages & bronze bushings; and

* Solar EPC business, under which HEIL provides complete comprehensive turnkey solutions to all solar photovoltaic requirements.

HEIL has 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 in CY2021. They offer a wide range of bearing cages starting from 20-2,000 mm in diameter and their bearing cages find its application in the automotive, railways, aviation & aerospace, construction, mining, agriculture, electrical and electronics, renewables sectors, etc.

Bearing cages are important components within a bearing and require the highest lead time for development and technical and tooling expertise for its manufacture when compared to other components of a bearing. Given their critical function and the resultant quality requirements, global players manufacturing bearings have steadily increased outsourcing the production of bearing cages and business from these bearing companies is now concentrated to a few bearing cage manufacturers including HEIL. HEIL has established strong customer relationship with leading global bearing manufacturers in the automotive, railways, renewable energy, and other industrial sectors. Additionally, HEIL has been involved by its key customer groups in their product development process from the design stage and accordingly, they have been able to ensure repeat orders from their customers. Each of HEIL’s top-5 customer groups (excluding customers’ contributing to revenue from scrap sales) have been their customers for over a decade. Their long-term relationship with customers is indicative of their quality consciousness, cost efficiency and design, tooling, and technological capabilities.


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