Sona BLW Precision Forgings’ (Sona Comstar) Rs 5,550-crore initial public offering (IPO) will open for subscription on June 14, 2021, at a price band of Rs 285-291 per share. Blackstone-backed Sona BLW issue will close on June 16, 2021. Auto component maker public issue comprises fresh issue of equity shares of up to Rs 300 crore and offer-for-sale (OFS) of up to 5,250 crore by selling shareholder Singapore VII Topco III Pte Ltd, an affiliate of the Blackstone Group Inc. The bidding for anchor investors will open on Friday, June 11, 2021.
The portion reserved for Qualified Institutional Buyers (QIBs) will be up to 75 per cent of the offer (Rs 4,162.50 crore), non-institutional investors to have up to 15 per cent of the portion reserved (Rs 833.50 crore) while up to 10 per cent will be reserved for the retail investors (Rs 555 crore). The IPO at the upper price band of Rs 291 looks fully priced, said Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares. The company operates in a competitive industry. “It would be interesting to watch how the company performs in EV Segment going ahead,” Doshi told Financial Express Online.
“On the financial front based on annualised FY21 EPS the PE comes around 80x while the P/BV comes around 12.93x which makes the issue costly. Therefore, in my personal opinion, it would be prudent to watch the performance in upcoming quarters before taking any decisions,” Abhay Doshi added.
The book running lead managers to issue are Kotak Mahindra Capital, Credit Suisse Securities, JM Financial JP Morgan and Nomura Financial. The registrar to Sona BLW IPO is KFin Technologies Pvt Ltd. The equity shares are proposed to be listed on BSE and NSE. Upon successful listing, the company will join the likes of Motherson Sumi Systems, Sundaram Calyton, Bosch Ltd, Bharat Forge, Mahindra CIE Automotive, Endurance Technologies, Minda Industries, Sundaram Fasteners, WABCO Ltd. The average industry P/E ratio stands at 4,150.66x. The company has planned to utilise the net proceeds from the issue towards the repayment/pre-payment of certain borrowings worth Rs 2,250 crore availed by the company and for general corporate purposes.
Sona Comstar is also one of the two largest exporters of starter motors from the country besides being the largest manufacturer of differential gears for passenger vehicles, commercial vehicles and tractors in India. Some of its key OEM customers include a global OEM of EVs, a North American passenger vehicle and commercial vehicles maker, Ashok Leyland, Daimler, Escorts, Mahindra & Mahindra, Mahindra Electric, Maruti Suzuki, Renault Nissan, Volvo and Volvo Eicher.
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