IPO Analysis: Harsha Engineers

Tushar Jain
/ Categories: Trending, IPO, IPO Analysis
IPO Analysis: Harsha Engineers

IPO Rating: Expect listing and long-term gains

About the issue: 

Harsha Engineers International Ltd (HEIL), the largest manufacturer of precision bearing cages is coming out with its Initial Public Offering (IPO) of equity shares with the face value of Rs 10 per share. The price band of the issue has been fixed at Rs 314 to Rs 330 per equity share. The issue size is Rs 755 crore at a higher price band. 

The IPO opening date is September 14, 2022, and it will be closing on September 16, 2022. The issue is likely to be listed on the exchange on September 26, 2022. The IPO market lot size is 45 shares and in multiples thereof. A retail-individual investor can apply up to a maximum of 13 lots (585 shares or Rs 193,050) at the upper price band. 

IPO Opening Date  


IPO Closing Date  


Issue Type  

Book Built Issue IPO 

Face Value 

 ₹10 per equity share 

IPO Price  

₹314 to ₹330 per equity share 

Market Lot  


Min Order Quantity  


Listing At  


Total Issue Size  


2,28,78,765 shares of ₹10* 

 (aggregating up to ₹755.00 Cr)* 

Offer for Sale 

90,90,900 shares of ₹10 (aggregating up to ₹ 300 Cr)* 

QIB Shares Offered  

Not more than 50% of the Offer 

Retail Shares Offered  

Not less than 35% of the Offer 

NII (HNI) Shares Offered 

Not less than 15% of the Offer 

*At Upper Price Band 


The company proposes to utilize the net proceeds from the issue for the funding of the following objects:  

  1. Prepayment or scheduled payment of a portion of existing borrowing availed by our company.  
  2. Rs 77.95 crore for funding of Capex for the purchase of machinery. 
  3. Rs 7.12 crore for infrastructure repairs and renovation of existing production facilities including office premises in India. 


The pre-issue promoter holding is 99.70 per cent and post-issue it will be at 74.61 per cent. 

About the company: 

Among the top producers of precision bearing cages worldwide, Harsha Engineers International Ltd (HEIL) is the largest producer of precision bearing cages in India's economy in terms of revenue. It provides a broad range of precision engineering products for various end-user industries and geographical markets. It also has a leading and strong position globally in its segment. 

The company supplies its products to customers in over 25 countries covering five continents i.e., North America, Europe, Asia, South America and Africa 

The business comprises two segments: 

Engineering business, - In this segment company produces complex and specialised precision stamped components, welded assemblies, brass castings, cages, and bronze bushings. Bearing cages are also manufactured by the company (in brass, steel, and polyamide materials). In CY 2021, it held a market share of roughly 50–60 per cent in the organised bearing cages market in India and 6.5 per cent in the organised bearing cages market worldwide. These cages were made of brass, steel, and polyamide. In their press meeting, company management revealed that almost 70 per cent of its revenue comes from this segment. 

Solar EPC business: In this division, the company offers total, all-inclusive, turnkey solutions for all solar PV requirements as well as operations and maintenance services for the solar industry. 

The company has five manufacturing facilities for the engineering business with two manufacturing facilities at Changodar and one at Moraiya, near Ahmedabad in Gujarat and one manufacturing unit each in Changshu, China and Ghimbav Brasov in Romania. 

Employees strength 

A total of 2,198 people were employed in the company as of March 31, 2022, with 1,955 of those working in the engineering sector being skilled and technically competent and 68 working in the solar EPC sector. 

Competitive strength  

  1. Comprehensive solution provider offering a diversified suite of precision engineering products across geographies and end-user industries. 
  2. Long-standing relationships with leading clientele. 
  3. Strategically located domestic and international production facilities and warehouses. 
  4. Expertise in Tooling, design development and automation. 
  5. Consistent track record of growth and financial performance. 
  6. Strong, experienced and dedicated senior management team and qualified workforce. 



Harsha Engineering has (on a consolidated basis) reported turnover and net profits of Rs 899.514 crore and  Rs 21.91 crore, respectively for FY20. For FY21 the same figures were Rs. 876.73 crore and  Rs 45.44 crore. Last fiscal year (FY22) revenue stood at Rs 1339.00 crore and profit at Rs 91.94 crore.  Each year, the company's net profit is doubling. For the fiscal years 2020, 2021, and 2022, the company had total assets of Rs 973.24 crore, Rs 981.07 crore, and Rs 1158.25 crore, respectively. The company's net worth has grown from Rs 433.22 crore in FY21 to Rs 527.9 crore in FY22. Harsha Engineering recorded an average EPS of Rs 8.50 and an average return on net worth of 13.17 per cent over the last three fiscal years. According to its NAV of Rs 68.34 as of March 31, 2022, and according to its post-IPO NAV of Rs 107.96 per share, the issue is valued at a P/BV of 4.83 and a P/BV of 3.06, respectively (at the upper cap).  

Peer group  

As per the offer documents, HEIL has shown Timken India, SKF India, Rolex Rings, and Sundram Fasteners as its listed peers. They are currently trading at a P/E of 65.12x, 55.32x, 35.42x, and 41.53x (as of September 09, 2022). However, they are not truly comparable on an apple-to-apple basis. If we attribute FY22 earnings on post IPO fully diluted equity capital, then the asking price is at a P/E of around 32.67x.  

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