By 21 March, 2018
Sandhar Tech’s IPO covered 6 times; Midhani issue booked one-fourth on first day
Photo Credit: Shah Junaid/VCCircle

Auto parts maker Sandhar Technologies Ltd’s initial public offering, which closed on Wednesday, was subscribed a little more than six times while the IPO of state-run alloy firm Mishra Dhatu Nigam Ltd (Midhani) crossed the one-fourth mark on its first day.

Sandhar’s offering of 10.87 million shares, excluding anchor allotment, received bids for 65.71 million shares, stock-exchange data showed.

The portion reserved for institutional buyers was subscribed 14.5 times. The category comprising high net-worth individuals and corporate bodies was covered 6.4 times.

The slot for retail investors, who cannot individually bid for shares exceeding Rs 2 lakh in value, was subscribed 1.11 times.

The IPO, which was covered 5% at the end of day one on Monday, picked up pace on Tuesday, reaching 40% subscription.

Sandhar was seeking Rs 1,998 crore in valuation through the IPO. The company aimed to issue fresh shares worth Rs 300 crore while private equity investor GTI Capital eyed selling its stake via the IPO.

VCCircle had previously reported that GTI Capital is likely to rack up neat returns from its bet on the auto parts maker. On 13 March, Akash Bhansali of Enam picked up a stake of around 5% in Sandhar Technologies Ltd from GTI Capital. The deal was worth Rs 80.51 crore ($12.4 million).

Sandhar will join 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.

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 builds safety and security systems for vehicles.

Midhani IPO

Midhani’s public issue got subscribed nearly 26% at the end of day one, receiving bids for 12.52 million shares out of 48.71 million shares on offer, stock exchange data showed. The IPO is not backed by any anchor investor.

The portion reserved for institutional buyers was subscribed 46%. The quota for high net-worth individuals and corporate bodies saw a few thousand bids for the 7.02 million shares on offer for the category.

The slot for retail investors, who cannot individually bid for shares exceeding Rs 2 lakh in value, was subscribed 10.55%.

Midhani’s employees bid for nearly 3% of the shares reserved for them.

The three-day IPO, which closes on Friday, involves sale of nearly 48.71 million shares, or 26% stake, by the government in the company.

If the government succeeds in selling 26% stake, the company automatically complies with the 25% minimum public holding norm for listed firms.

Midhani joins state-run Bharat Dynamics Ltd and Hindustan Aeronautics Ltd in going to the market. The last two firms’ IPOs managed to sail through on the final day, with Hindustan Aeronautics’ issue resorting to bailout from Life Insurance Corporation of India (LIC).

Midhani is seeking a valuation of Rs 1,686 crore ($260 million) through the IPO at the upper end of the public issue’s share price band, ranging from Rs 87 to Rs 90. Retail investors and employees seeking to participate will get Rs 3 discount on the price at which the shares are allotted.

The government aims to raise Rs 438.37 crore through the IPO.

Merchant bankers SBI Capital Markets and IDBI Capital are managing the IPO.

The company had filed for IPO in January, and got a nod a month later.

The firm makes special steel and super alloys, besides being the only maker of titanium alloys in India. Its products have applications in defence, aerospace, power generation, nuclear and other general engineering industries.

VCCircle had previously reported that the government was the biggest beneficiary from the IPO boom in 2017. The government took four state-run companies public, raising about Rs 21,118 crore, besides selling stakes in already listed firms.

Midhani was established in 1973 to help India achieve self-sufficiency in alloys of strategic importance. Its manufacturing facility is in Hyderabad. It is establishing one facility each in Rohtak (Haryana) and Nellore (Andhra Pradesh).

Midhani reported a net profit of Rs 27.30 crore for six months that ended on September-end 2017 and revenue (from operations) of Rs 208.06 crore for the same period.

The company’s revenue from operations stood at Rs 809.70 crore for 2016-17 and Rs 761.44 crore for 2015-16.

As on 31 January 2018, the company had an order book of Rs 517 crore, including defence orders worth Rs 283 crore and aerospace orders worth Rs 168 crore.

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