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Auto component maker Varroc Engineering lists at Rs 1,015 per share

Auto component maker Varroc Engineering lists at Rs 1,015 per share

Auto component maker Varroc Engineering lists at Rs 1,015 per share
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By Ajay Vaishnav  Jul 6, 2018 12:25:44 PM IST (Published)

Auto component maker, Varroc Engineering, got listed at Rs 1,015 on Friday, gaining 5% against the issue price of Rs 967.

Auto component maker, Varroc Engineering, got listed at Rs 1,015 on Friday, gaining 5% against the issue price of Rs 967.

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At 10:58 AM, it was trading at Rs 1,010.45, down by 4.55 percent on the NSE.
Stock touched a high of Rs 1,025 and a low of Rs 1,000 so far. On BSE, the stock opened at Rs 1,032 on first day of trade.
The Rs 1,955-crore initial public offering (IPO) available from June 26-28, was over subscribed 3.6 times, with strong institutional demand, while the demand for retail investors stood at 9.1 times.
The issue fetched about Rs 584 crore from anchor investors like the Canadian Pension Fund (CDPQ) and Smallcap World Fund.
Aurangabad-based Varroc Engineering manufactures and supplies exterior lighting systems, plastic and polymer components to clients like JLR, Volkswagen, BMW among others.
The company enjoys about 6% market share of global premium PV lighting market and has 36 manufacturing facilities spread across seven countries.
An overwhelming majority of company’s revenues come from Europe (41.8%) and India (34.7%), while North American operations contribute about 22.3%of Varroc’s business.
Varroc’s revenue stood at Rs 10,378 crore in FY18, growing by 8%. The company's compound annual growth rate (CAGR) grew at topline and bottomline CAGR of 12% and 10% respectively over FY16-18.
Major investor concerns stem from the slowdown in revenues of Varroc’s top clients such as Jaguar Land Rover, Volkswagen and BMW in the last one year.
ICICI Securities recommends subscription from a long term perspective, anticipating returns of nearly 16%.
Centrum Broking too recommends subscription, while Angel Broking has taken neutral stance due to relatively higher pricing over peers like Motherson Sumi.
Angel also points at lower Return on equity (RoE) of 16% against Motherson Sumi’s 25% in FY18.
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