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Auto-parts maker Sandhar Tech ends below IPO price on trading debut

Auto components maker Sandhar Technologies Ltd disappointed on its stock-exchange debut on Monday, with its shares ending the first day below the issue price after listing at a 4% premium.

Shares of Sandhar Tech began trading on the BSE at Rs 345 apiece, compared with the initial public offering price of Rs 332 apiece, stock-exchange data showed. The shares traded between Rs 318.55 and Rs 351.45 apiece, before closing at Rs 322.55, down 2.9% from the IPO price. The BSE’s 30-stock benchmark Sensex gained 0.9%, led by auto stocks.

Sandhar now commands a market capitalisation of Rs 1,941.45 crore, lower than the Rs 1,998.33 crore valuation it sought via the IPO.

The Gurgaon-based company, which was backed by private equity firm GTI Capital, is the 10th firm to list on the main board of the bourses in 2018. Five of the previous nine firms had gained on debut.

Sandhar joins over 50 auto parts makers on the stock exchanges. These include Minda Industries Ltd, JBM Auto Ltd, Motherson Sumi Systems, Bharat Gears and GNA Axles Ltd.

Endurance Technologies Ltd was the most recent auto component maker to go public. The company’s shares listed on the bourses in October 2016 with 37% gains on debut. Its IPO was subscribed nearly 43 times.

Sandhar’s IPO received strong investor turnout despite volatile markets. The IPO was subscribed a little over six times.

The IPO comprised fresh shares worth Rs 300 crore while GTI Capital sold its entire stake.

GTI Capital likely made high returns from its bet. On 13 March, three days ahead of the IPO, Akash Bhansali of Enam acquired a 4.21% stake (after adjusting for fresh shares in IPO) from GTI Capital. The deal was worth Rs 80.51 crore ($12.4 million), helping the PE firm fully exit its near five-and-a-half year investment.

The company had refiled its draft proposal on 8 December 2017. It had received regulatory clearance on 1 March.

When Sandhar Tech had proposed an IPO two years ago, GTI Capital had offered to sell up to 5.11 million shares.

The company had received a green signal from the capital markets regulator, but could not execute its plans.

Merchant bankers ICICI Securities and Axis Capital managed the IPO.

Sandhar was incorporated in 1987 by first-generation entrepreneur Jayant Davar. He is the co-chairman and managing director of the company.

The company focuses on safety and security systems in vehicles. It has 29 factories across eight states in India, besides two facilities in Spain and one in Mexico. It has one assembly and packaging centre in Poland. The company is setting up eight more units in India.

Sandhar had commenced operations as a supplier of sheet metal components to Hero MotoCorp, formerly Hero Honda Motors Ltd. Its existing clients include Royal Enfield, Honda Cars, Tata Motors, Ashok Leyland, Caterpillar and Bosch.

It caters to 79 Indian and global vehicle manufacturers across various segments. It makes 21 categories of products catering to different industry segments, including two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles and tractors.

The company reported consolidated net profit of Rs 34.57 crore for the six months ended September 2017 on net consolidated revenue (from operations) of Rs 989.40 crore.

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