Divgi TorqTransfer Systems IPO sails through on Day 3, issue closes today

Divgi TorqTransfer Systems, whose Rs 412 crore initial public offering (IPO) closes today, sailed through on the last day of the bidding process. The issue majorly attracted the retail bidders, whose portion sailed through on day two itself and was overall booked 38 per cent.
 

Pune-based Divgi TorqTransfer Systems is engaged in the business as an automotive component entity. Its IPO opened for subscription on Wednesday, March 1. The company is selling its shares in the range of Rs 560-590 apiece.

According to the data from BSE, investors made a bid for 39,77,725 equity shares, or 1.04 times, against a total of 38,41,800 equity shares offered by the company, as of 14.00 hours on Friday, March 03, 2023.

The portion reserved for retail bidders was subscribed 2.77 times, whereas allocation for non-institutional investors (NIIs) was booked 58 per cent. However, the quota for qualified institutional bidders saw bidding of up to 69 per cent.
 

Analysts tracking the issue are majorly positive about it, suggesting investors to subscribe for it for a longer-term perspective. However, they have flagged a few concerns including client concentration on a few big names and high dependence on imports for raw materials as the key risk for the issue.

Considering the FY22 and FY23 EPS of Rs 15.09 and 16.78 on a post-issue basis, the company is going to list at a P/E of 39.10 and 35.15 times, respectively, with a market cap of Rs 1,804.4 crore, whereas its peers namely Sona BLW, Sundram Fasteners, Bosch, ZF Commercial Vehicle and Endurance Technologies are trading at a higher P/E, said Marwadi Shares and Finance.

"We assign a 'subscribe' rating to this IPO as it is one of the very few suppliers in India having the capability to develop and provide system-level transfer cases, torque couplers, DCT solutions and transmission systems for EVs across a wide array of automotive vehicles and geographies, with leadership across select product categories," it said.
 

Divgi Torqtransfer Systems allotted 31,43,290 equity shares to 12 anchor investors at Rs 590 per share aggregating to about Rs 185.45 crore, the company said in a circular on BSE. Anchors include Matthews Asia Funds, Aurigin Master Fund, ICICI Prudential, Motilal Oswal and some other mutual funds and more insurance companies.

 

Divgi is a prominent manufacturer of steel synchronizers produced domestically. Overall, the company’s strength lies in its in-house software development capabilities, providing them an edge over other competitive players in the field, said BP Equities.

 

Its approach to focus on its research & development in response to serving emerging trends and improving its market share by catering to new customers bodes well with its growth strategy plan. The company maintained a healthy financial performance despite the overall slowdown in the global automotive sector, it said with a 'subscribe for the long term' rating.

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