Sona BLW Precision Forgings IPO Opens today and closes on 16th June’21.
With an IPO size of Rs.5550Crores, it is the biggest ever IPO in auto components segment in India. Out of the total issue size, Rs.300Cr is Fresh issue and Rs.5250Cr. is OFS.Through OFS, Blackstone backed Singapore VII Topco III Pte. Ltd will reduce its shareholding from 66.28% to 34.18% post issue.
The IPO Price Band for the IPO is fixed at Rs.285-Rs.291. The company raised Rs 2498Cr.through anchor allotment. Total of 24 FPIs, 11 domestic mutual funds, 5 life insurance companies and 2 AIFs were a part of Anchor book.
Company is One of India’s leading automotive technology company which is into designing, manufacturing and supplying automotive systems and components.
Supplies to automotive OEMs, for both electrified and non-electrified powertrain segments
Chief product lines include Differential gears (27.8% of sales) , Differential assemblies (17.6% of sales) , Micro hybrid starter motors (26.7% of sales) , Conventional starter motors (23.8% of sales)
Has total of 9 manufacturing and assembly facilities across India, China, Mexico and USA, of which 6 are located in India
Company is a Global play and drives 75.4% of sales from overseas markets with 40% of it from North America and 25% from Europe as per FY21 financials
One of the leading manufacturers and suppliers to global EV markets, company providing a strong play on the upcoming mega opportunity of electrification.
As of FY21, the company obtained ~40% of revenues from ‘electrified’ platforms, including ~14% from pure battery EVs (BEV).
Commands 8.7% global market share in BEV differential assemblies as of FY21
Financials Restated Consolidated
Till Dec 2020 Mar-20 Mar-19 Mar-18
Revenue 1026 1038 699 623
EBITDA 299.3 242.2 199.7 170.3
Margins 29.2% 23.3% 28.6% 27.3%
PAT 155.4 360.3 173.1 77.5
What is Brokerage house recommendation on the IPO Subscription
As per ICICI Sec the company provides an exciting play on electrification and possesses healthy financial strength (~28% margins, ~20% RoCE) but valuations proposed are rich (~74x P/E on FY21 basis). Nevertheless, believe the company offers a good investment case on the back of strong growth prospects. Accordingly, ICICI Sec recommend Subscribe only for long term.
Other Brokerage firms like Choice Broking and Nirmal Bang also recommending their clients to Subscribe for the IPO for long term.
