Harsha Engineers Ltd, which makes ball bearing cages, has started work on an initial public offering (IPO) which could see the manufacturer raise as much as Rs500 crore, three people aware of the development said.
The company, founded in 1972, makes brass, steel and polyamide ball bearing cages as well as stamping components primarily for the automotive sector.
“Harsha Engineers has appointed investment banks Axis Capital and Edelweiss and has started work on its draft IPO prospectus. The company is looking to raise around Rs450-500 crore through the IPO, which could be used for capital expenditure and for debt reduction,” said one of the people cited above, requesting anonymity as he is not authorized to speak to reporters.
The company is looking at a valuation of around Rs2,500 crore in the initial share sale, according to the second person cited above.
“Harsha Engineers is a unique play in the manufacturing sector. They are the largest player in this space in the country. They also have significant overseas operations, in China and Europe, and that puts them in the top three companies globally in this space,” he added.
In 2016, Harsha Engineers acquired Romanian company Johnson Metall SA for around Rs180 crore, data from the company’s filings with the registrar of companies (RoC) shows.
In 2014, Harsha Engineers acquired a cage manufacturing and brass foundry unit in the Suzhou district of China. The company had opened its first manufacturing unit in China in 2010.
Emails sent on Wednesday to Harsha Engineers’ top management, Axis Capital and Edelweiss did not elicit any response. According to data from the RoC filings, Harsha Engineers reported revenue of Rs637.4 crore in financial year 2015-16, as against Rs653.7 crore in the previous year.
India’s primary market has witnessed a few public offerings from manufacturers in the recent years. Earlier this year, electronic goods maker Amber Enterprises India Ltd’s IPO was subscribed 165 times. The company raised Rs600 crore through the offering. In 2017, another electronic goods maker, Dixon Technologies (India) Ltd, raised Rs600 crore through its IPO.
Several auto component makers too have raised funds through IPOs. In the last three years, auto component makers Sandhar Technologies Ltd, Endurance Technologies Ltd, GNA Axles Ltd and Precision Camshafts Ltd have raised funds through IPOs.
Other manufacturing companies that are planning to go public include farm equipment maker Milltec Machinery Pvt. Ltd, which is backed by Renuka Ramnath-led private equity firm Multiples PE. Milltec plans to raise Rs550 crore through its IPO, Mint reported on 16 April.
On 18 April, Mint reported that Vectus Industries Ltd, a maker of plastic storage tanks and pipes, backed by Asia-focused private equity firm Creador, is looking to go public and will soon file its draft prospectus for a Rs500 crore IPO.
So far this year, 14 companies have raised Rs18,591.7 crore through the IPO route, according to data from primary market tracker Prime Database.
Source: Mint