Divgi TorqTransfer IPO Day 2: The public offer of Nandan Nilekani family trust-backed Divgi TorqTransfer Systems has opened for subscription on Dalal Street on Wednesday. The issue will be available for subscription till March 3.
Divgi TorqTransfer IPO: Subscription Status
Divgi TorqTransfer Systems’ initial public offering (IPO) received bids for 4.75 lakh equity shares against an offer size of 38.41 lakh amounting to a 12 per cent subscription on March 1, the first day of bidding.
Retail investors bought 60 per cent shares of the total portion set aside for them in the first IPO of 2023. High networth individuals (HNIs) bid for 6 per cent of the 10.47 lakh shares reserved for them.
We have seen bids for 700 shares by qualified institutional buyers, against their reserved portion of 20.95 lakh shares.
Divgi TorqTransfer IPO: Price Band
The auto components maker has fixed a price band of Rs 560-590 per equity share and at the upper end, the public issue is expected to fetch around Rs 412 crore. The shares are expected to get listed on the exchanges on March 14.
Divgi TorqTransfer IPO: Offer Size
As part of the OFS, Oman India Joint Investment Fund will offload 22,50,000 shares, while Nilekani’s family trust NRJN Family will sell 14,41,441 shares.
Nilekani family trust will bag around 360 per cent profit for its investment in the company when it will offload 14.4 lakh shares as part of OFS. According to the prospectus Nilekani’s trust acquired shares on an average cost of Rs 125.28. Considering the upper price band of Rs 590, the trust will take home profit of nearly Rs 67 crore.
Other selling shareholders in the OFS include Bharat Bhalchandra Divgi, Sanjay Bhalchandra Divgi, Ashish Anant Divgi, Arun Ramdas Idgunji and Kishore Mangesh Kalbag.
Divgi TorqTransfer IPO: Lot Size
Investors can bid for a minimum of 25 shares and in multiples of 25 shares thereafter. Retail investors can make a minimum investment of Rs 14,750 for a single lot and a maximum of Rs 1,91,750 for 13 lots, at the higher end of the price band.
Divgi TorqTransfer IPO: About Company
Divgi TorqTransfer develops and provides system-level transfer case, torque coupler and DCT solutions, to automotive original equipment manufacturers through its three manufacturing and assembling facilities in India.
The company claims to be the largest supplier of transfer case systems to passenger vehicle manufacturers, the only player manufacturing and exporting transfer cases to global OEMs from India and the only manufacturer of torque couplers in India, as per CRISIL report.
Divgi TorqTransfer IPO: GMP
As per market observers, Divgi TorqTransfer Systems shares have been commanding a premium (GMP) of Rs 60 in the grey market in the previous sessions. The equity shares of the company are expected to list on March 14 on stock exchanges BSE and NSE.
Should investors subscribe to the issue? Here’s what experts say:
ICICI Direct said investors can subscribe to the issue for long term gains as trailing valuations discount its healthy financials. “We like the company for its technical prowess in transmission space and incremental revenue streams coming on board going forward in EV transmission as well as dual clutch transmission space,” the brokerage said.
Manish Khanna, Co-Founder, of Unlisted Assets, said: “The company is one of the leading players supplying transfer case systems to automotive OEMs and the largest supplier of transfer case systems to passenger vehicle manufacturers in India. They are in the process of designing and developing prototypes of transmission systems for electric vehicles. Divgi TorqTransfer Systems Limited is a dividend-paying company and has been reporting growth in its top line and bottom line. The company currently earns 35% from export customers and 65% from domestic customers. Considering the issue band price of Rs.560-Rs.590, the expected listing price could be Rs.655 (Upper band price plus the GMP). The IPO can give listing gains of up to 11 per cent.”
Nirmal Bang Securities recommended investors to subscribe to the IPO, saying the company has an edge with its ability to manufacture various auto component products that very few in the market replicate. “The IPO is being offered at reasonable valuations at 39.1x FY22 earnings, considering the future growth opportunities,” it said.
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