Precision Camshafts’ IPO subscribed 29% as of day 2

The public issue of Precision Camshafts Ltd is yet to reach one-third mark with its IPO seeing applications for just 29 per cent of the issue at the end of the second day, data collated by the stock exchanges showed.

While qualified institutional buyers stayed away from the issue on the second day too, retail investors' portion saw 57.6 per cent subscription and non-institutional investors bid for only 2.3 per cent of the shares reserved for them.

The issue got off to a slow start receiving bids for about 6 per cent of the shares on offer at the end of the first day, after the auto ancillary company raised Rs 123 crore (about $18 million) from a group of anchor investors.

Ahead of the IPO, the Solapur-based maker of camshafts allotted 6.61 million shares to anchor investors at Rs 186 apiece.

This is the first IPO on Indian bourses this year and comes at a time when stock-market weakness over the past few weeks has prompted several companies to rethink their plans to launch share offerings. But new firms are joining the queue hoping to emulate the success of some issues that not only sailed through but also beat the wider market in the last few months despite the valuation meltdown in the secondary market. 

Although not the most awaited IPO, the performance of Precision’s issue that now has just one day to sail past the finish line, could set the tone for primary market as nearly two-and-a-half dozen Indian companies are waiting to go public.

The issue will close on January 29. The company has fixed a price band of Rs 180 to Rs 186 a share for the offering. It would raise as much as Rs 410 crore at the top end of the price band.

Promoted by Yatin Shah and Suhasini Shah, Precision Camshafts makes more than 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications at its plants in Solapur, Maharashtra.

It also has two joint ventures. The first, Ningbo Shenglong PCL Camshafts Company Ltd, is for machining of camshafts and the second, PCL Shenglong (Huzhou) Specialised Casting Company Ltd, is for setting up a foundry in China.

Most of its revenue comes from export of camshafts to various original equipment manufacturers directly and indirectly.

The company plans to use the proceeds of the IPO to set up a machine shop for ductile iron camshafts at the export-oriented unit in Solapur. 

While the new plant is expected to cost Rs 200 crore, the rest of the proceeds would be used for general corporate purposes. 

India Infoline, SBI Capital Markets, and HDFC Bank are the book-running lead managers to the issue.

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