Sona Comstar IPO – Day 1 – 5% subscribed – retail portion booked 25%

Sona BLW Precision Forgings (Sona ComstarRs )’s 5,550 crore public issue was subscribed 5% on June 14, the first day of bidding supported by retail investors.

Retail investors’ portion has been subscribed 25%, while non-institutional investors have bid for 59,169 equity shares against their reserved portion of more than 2.92 crore equity shares. Institutional investors have not yet submitted their bids.

The issue’s price band was set at Rs 285-291 per equity share. The offer will be open for bidding until June 16. According to subscription statistics accessible on exchanges, the public offering attracted bids for 50 lakh equity shares, compared to the offer size of around 10.71 crore equity shares.

The offer consists of a Rs 300 crore fresh issuance and a Rs 5,250 crore offer for sale by Singapore VII Topco III, a Blackstone Group affiliate. After deducting issuance charges, the business intends to use the proceeds from the new issue to repay a debt of Rs 241.12 crore.

Many analysts believe that at the upper band of the issue price, Sona Comstar will trade at a P/E multiple of 40x its annualised 9MFY21 sales, which is lower than its listed peers Bosh (97x) and Motherson Sumi (77x) but higher than Sundaram Clayton (23x)

Sona Comstar’s primary business is designing, manufacturing, and distributing mission-critical automotive components of the highest quality. Sona Comstar was one of the top ten global participants in the differential bevel gear category in 2020 and one of India’s leading exporters of starter motors.

The business boosted its global market share for differential gears and starter motors to 5.0 percent and 3.0 percent in 2020, respectively, from 4.5 percent and 2.5 percent in 2019. According to the Ricardo Report, their global market share for BEV (battery electric vehicle) differential assemblies was 8.7% in 2020.

With nine production and assembly facilities spread across the United States, India (6), China, and Mexico, the company supplies products to countries including India, the United States, Europe, and China.

Additionally, the CRISIL Report indicates that the company is India’s leading manufacturer of differential gears for passenger vehicle, commercial vehicle, and tractor OEMs (original equipment manufacturer), with a market share of around 55% to 60%, 80% to 90%, and 75% to 85%, respectively.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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