Gurugram-based automotive components manufacturer, Sona Comstar, is in the market to raise some serious money to facilitate its investor Blackstone to offload part of its stake in the company.
A public issue of Rs 5,500 crore will let Blackstone offload nearly half of its present 65 percent stake, leaving it holding a little over 33 percent of its holding in Sona Comstar. Its post-money valuation on the upper end of the price band will be Rs 16,974 crore.
The highly diversified auto tech player is an industry leader in highly specialised "mission-critical" auto components such as differential assemblies and start-up and traction motors, across categories of passenger vehicles, commercial vehicles, and tractors, both electrified and non-electrified.
It is also one of the very few automotive components makers in India whose plans to grow hinge on an ever-increasing global electric vehicle penetration. The company claims industry-leading profitability among domestic and global peers, and a higher R&D spend compared to the competition.
Although the penetration of pure-play fully electric vehicles remains restricted internationally and in India, the company is "obsessed with electric vehicles (EVs)," according to Vivek Vikram Singh, managing director, and chief executive officer of Sona Comstar.
The numbers speak to this fact: Currently, 14 percent of Sona Comstar's revenue comes from pure battery-electric vehicles (BEVs), while 27 percent of revenues come from hybrid and micro-hybrid vehicles. It has also been gaining market share competing with global peers.
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In 2020, Sona Comstar accounted for an 8.7 percent market share in BEVs, according to Singh. Most of Sona Comstar's business, however, comes from international markets like Europe, the US, and China. About 75 percent of its revenues come from its global business, including a sizeable revenue from China, the world's largest EV market.
As automakers the world over plan to release over 200 new electric car models, Sona Comstar is poised to benefit from this shift, the company said.
The company's main competitors include Denso, Borg Warner, SEG Automotive, Hitachi, Valeo, according to the company's Draft Red Herring Prospectus (DRHP).
According to chairman Sunjay Kapoor, Sona Comstar is one of few global auto tech companies and "certainly the only in India" at the intersection of a sizeable and increasing presence in EVs, best-in-class financial performance, and a scaled manufacturer with a highly profitable growth outlook.
Sona Comstar started out as Sona BLW Precision Forgings in 1995 and took its current form after the acquisition of Comstar Automotive in 2019. Blackstone acquired 66.2 percent in Sona BLW the same year.
Sona BLW entered the global EV market in 2016, starting off with the supply of differential assemblies, and now offers integrated drive unit solutions to most major global electric vehicle makers -- including the world's largest EV manufacturer and the most valued auto manufacturer globally.
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It is also the largest manufacturer of differential gears for PVs, CVs, and tractor OEMs in India, and serves 6 of the world's top 10 PV makers, top 3 CV makers, and top 8 tractor manufacturers, according to a presentation Sona Comstar shared in a press meet announcing its IPO.
Aided by government policy and incentives, OEM strategy shifts towards EVs and a changing customer preference in favour of clean energy, Sona Comstar expects to further consolidate as the "supplier to go-to for the most demanding needs for EV powertrains," according to Singh.
(Edited by: By Jomy Jos Pullokaran)
First Published: IST