Sansera Engineering Limited had opened its initial public offering (IPO) yesterday on Tuesday. As the first day of the company’s issue came to a close, the IPO saw a healthy response from investors in the form of a 53 per cent subscription. The Sansera Engineering IPO was set to be carried out for three trading days. It had opened on September 14 and will close on September 16. The public issue received bids for 64.18 lakh equity shares against an offer size that amounted to 1.21 crore equity shares. The offer size itself was reduced to 1.21 crore from the earlier 1.72 crore equity shares as the company mobilised around Rs 382 crore from anchor investors a day before the IPO opened, which was September 13.
In terms of subscriptions by the individual investor groups, the retail individual investors led the race with an 87 per cent or 0.87 times subscription on day 1 of the issue. The next largest category was surprisingly the employee group which subscribed to the issue 0.36 times or 36 per cent. The qualified institutional buyers (QIBs) had subscribed to the issue 0.29 times or 29 per cent and the non-institutional investors (NIIs) had only subscribed 0.07 times to the issue.
The Sansera Engineering IPO carries an issue size of 17,244,324 equity shares which is entirely made up of an offer for sale (OFS). The aggregation of the IPO issue size amounts to Rs 1,282.98 crore with a price band of Rs 734 to Rs 744 per equity share. The issue also has a face value of Rs 2 per equity share.
The grey market premium (GMP) for the public issue stood at Rs 60 at the time of this article, as per information derived from IPO Watch. This indicated that the issue was trading at a premium of Rs 794 to Rs 804 per equity share on the unlisted grey market.
Speaking on the company’s standing in the current market, JM Financial said in a note, “The company is one of the top 10 global suppliers of connecting rods within the light vehicle segment (passenger vehicles with gross vehicle weight of 3.5 tonnes or less, “Light Vehicle”) and one of top 10 global suppliers of connecting rods within the commercial vehicle (“CV”) segment for CY 2020. (Source: The Ricardo Report). Within India, the company is one of the leading manufacturers of (i) connecting rods, crankshafts, rocker arms and gear shifter forks for two-wheelers and (ii) connecting rods and rocker arms for passenger vehicles. Specifically, the company is the largest supplier of connecting rods and rocker arms to passenger vehicle OEMs in India.”
Talking about the public issue, BP Wealth said, “They have a well-diversified portfolio of segments, products, customers and geography. On the valuation front, the issue is priced at P/E of 36.2x based on FY21 earnings, diluted equity shares and upper price band which is fairly priced when compared to its listed industry peers (i.e, Endurance Technologies-43.3x, Minda Industries-91.6x, Sundram Fasteners 50.4x, Suprajit Engineering-30.7x and Motherson Sumi-64.1x). Considering the strong product portfolio, advanced manufacturing capabilities and robust track record, we give a “SUBSCRIBE” rating for the long term.”
As far as reservations go, the QIBs had the largest reserved portion that stood at 50 per cent. The retail investors had a 35 per cent reservation and the NIIs had a 15 per cent reservation. Employees did, however, get a Rs 36 discount per equity share. The basis of allotment for the issue is set to take place on September 21, almost a week after the issue closes.