The Rs 5,550-crore Sona BLW Precision Forgings Limited ( Sona Comstar) initial public offer (IPO) will hit the market on June 14 and close on June 16. The price band is between Rs 285-291 per share. When the IPO hits the market, it will be the largest one by an auto component maker in India. The size of the IPO has been cut by Rs 450 crore from the earlier Rs 6,000 crore.
The public issue of the auto component maker includes a fresh issue of shares of Rs 300 crore and an offer for sale (OFS) of up to Rs 5,250 crore by Singapore VII Topco III Pte Ltd, which is an affiliate firm of Blackstone. The anchor investor bidding will begin on Friday, June 11. Blackstone Group intends to cut its company by way of the IPO. Currently, the Group has 66.28 per cent stake in the company.
Qualified institutional buyers (QIBs) are allowed up to 75 per cent of the offer or Rs 4,162.50, non-institutional investors are allowed to have up to 15 per cent or Rs 833.50 crore. Ten per cent is reserved for retail investors, which is about Rs 555 crore. Bids may be made for at least 51 equity shares in multiples of 51 equity shares from thereon.
The company had filed its draft red herring prospectus (DRHP) in February 2021. According to the draft papers, the company plans to utilise a portion of the proceeds of the IPO to repay existing debt. The remaining will be channelised towards building debt funding for future capital expenditure investments. The company received capital markets regulator SEBI’s green signal for the IPO in early May.
From the financial perspective, Sona BLW Precision Forgings Limited’s (Sona Comstar) profits have risen from Rs 77.57 crore in fiscal year 2018 to Rs 360 crore in FY 2020. The company’s net profits were at Rs 155 crore during the nine-month period ended December 2020. The firm has EBITDA margins in the range of 25 per cent and ROE of 35 per cent.
The investment banks working on the Sona BLW Precision Forgings Limited IPO (Sona Comstar) include JM Financial, Credit Suisse, Kotak Mahindra Capital, Nomuar and JP Morgan.
About Sona BLW Precision Forgings Limited (Sona Comstar)
Sona BLW Precision Forgings Limited (Sona Comstar) designs, manufactures and supplies critical auto systems and components including motor control units, EV traction motors and differential assemblies, among others. The company supplies components to automotive OEMs in India, China, Europe and the US for electrified and non-electrified segments. The company is also the biggest manufacturer of differential gears for tractors, passenger and commercial vehicles in India. In 2019, Blackstone is the world’s biggest alternative asset manager and owner of commercial realty in India. The company announced the merger of the Chennai-based auto components company Comstar to form Sona BLW Precision Forgings Limited (Sona Comstar).
Incidentally, Blackstone’s housing finance portfolio company, Aadhar Housing Finance has also filed its DRHP with SEBI for a Rs 7300 -crore IPO. The Sona BLW Precision Forgings Limited (Sona Comstar) will be the second big IPO of the Blackstone Group.
Sona BLW Precision Forgings Limited (Sona Comstar) is a global firm and has diversified across customers, products and platforms. It is among the biggest manufacturers of precision-forged gears for differentials and has a market share of 6 per cent globally in this segment. Some of the key OEM customers for Sona BLW Precision Forgings Limited (Sona Comstar) include Ashok Leyland, Mahindra Electric, Renault Nissan, Volvo, Daimler, Escorts and Mahindra & Mahindra.
Auto components sector
According to CRISIL, the auto component sector will witness a rise in revenues in fiscal year 2022, with a demand surge from OEMs and exports. According to the ratings agency, the increase in OEM demand will lead to an increase of revenues of up to 20 – 23 per cent for the auto components sector in the fiscal. Exports account for more than 25 per cent to the revenues of the sector. The auto component sector exports over 25 per cent of its production, and the European Union and the United States account for 60 per cent of the exports.
Important Dates to Remember
Here are some important dates that you should remember if you plan to apply for the Sona BLW Precision Forgings Limited IPO (Sona Comstar) that is to be launched on the 14th of June 2021.
|Open Date of IPO||14 June 2021|
|Close Date of IPO||16 June 2021|
|Allotment Basis||Not Announced|
|Refund Initiation||Not Announced|
|Credit of Shares to Demat Account||Not Announced|
|Listing Date of IPO||Not Announced|
The Blackstone Group-backed Sona BLW Precision Forgings Limited (Sona Comstar) will open its IPO on June 14 with a price band of Rs 285-Rs 291. The issue closes on June 16. The automotive components maker’s IPO size is Rs 5,550 crore with an offer for sale of up to Rs 5,250 crore. If you are interested in the Sona BLW Precision Forgings Limited IPO (Sona Comstar), log in to your Angel Broking demat/IPO account for more details.