Harsha Engineers International Limited is the largest manufacturer of precision bearing cages, in terms of revenue, in organised sector in India, and amongst the leading manufacturers of precision bearing cages in the world. They offer diversified suite of precision engineering products across geographies and end-user industries. Their business comprises: (i) engineering business, under which they manufacture bearing cages (in brass, steel and polyamide materials), complex and specialised precision stamped components, welded assemblies and brass castings and cages & bronze bushings; and (ii) solar EPC business, under which they provide complete comprehensive turnkey solutions to all solar photovoltaic requirements. Company 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 CY 2021. They offer a wide range of bearing cages starting from 20 mm to 2,000 mm in diameter and the bearing cages find its application in the automotive, railways, aviation & aerospace, construction, mining, agriculture, electrical and electronics, renewables sectors etc. As of March 31, 2022, they have been able to manufacture more than 7,205 bearing cages and more than 295 other products for customers in the automotive, railways, aviation & aerospace, construction, mining, agriculture, electrical and electronics, renewables sectors, allowing them to meet changing customer requirements. In addition, over the past three years the product development and innovation centre has developed more than 1,200 products in different bearing types. Company has established strong customer relationship with leading global bearing manufacturers in the automotive, railways, renewable energy and other industrial sectors. Additionally, they have been involved by the key customer groups in their product development process from the design stage and accordingly, they have been able to ensure repeat orders from the customers. Each of the top five customer groups (excluding customers' contributing to revenue from scrap sales) have been their customers for over a decade. The top five customer groups (excluding customers' contributing to revenue from scrap sales), as per the Restated Consolidated Financial Statements, contributed to revenue from operations from engineering business, Rs 9,323.39 million, Rs 6,315.65 million, and Rs 6,426.31 million for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively and constituted 70.55%, 72.28%, and 72.54% of our total revenue from operations for, Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. Company has four strategically located manufacturing facilities for the engineering business with one of the principal manufacturing facilities at Changodar and one at Moraiya, near Ahmedabad in Gujarat in India, and one manufacturing unit each at Changshu, China and Ghimbav Brasov in Romania. They supply products to customers in over 25 countries covering five continents i.e., North America, Europe, Asia, South America and Africa. To help them meet 'just in time' requirements of the customers, they have entered into arrangements to stock inventory in warehouses spread across more than 20 locations across the world including in, Europe, US, China and South America. As per financial performance, HEIL has posted total income/net profits of Rs 899.51 Cr / Rs 15.46 Cr (FY20), Rs 876.73 Cr / Rs 50.59 Cr (FY21) and Rs 1338.99 Cr / Rs 93.39 Cr (FY22). So as per last three years data, company has shown growth. They have posted an average EPS of Rs. 12.1 and average RoNW of 13.17% for last three fiscals. Issue is priced at a P/BV of 4.83 as per NAV of 68.34 on 31.03.22. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 32, which looks fully priced, but if we take FY21 earnings than P/E is around 59. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, 3 lead managers are associated with this IPO, and have handled around 11 IPOs in last three fiscals.Axis Capital Limited: This is 40th IPO from this BRLM. From last 10 IPOs, 3 opened below issue price and remaining opened above issue on the day of listing. As of now, 3 are trading below issue price and other are trading above issue price. ( As on 09.09.22)Equirus Capital Private Limited: This is 9th IPO from this BRLM. From last 8 IPOs, 1 opened below issue price and remaining opened above issue on the day of listing. As of now, 1 are trading below issue price and other are trading above issue price. ( As on 09.09.22)JM Financial Limited: This is 29th IPO from this BRLM. From last 10 IPOs, 2 opened below issue price and remaining opened above issue on the day of listing. As of now, 2 are trading below issue price and other are trading above issue price. ( As on 09.09.22) As per financials, Harsha Engineers International Limited has shown good growth, RoNW is 17.42% and P/E is respectively 32 and 59 as per FY22 and FY21 earnings, which looks fully priced. Company is manufacturer of precision bearing cages and leading manufacturer in India as well as in World. So we expect, company will able to grow at good rate. Performance of BRLMs are good. So, we give SUBSCRIBE rating for this IPO.
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