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Sona Comstar IPO subscribed 11% on day 1; retail portion booked 51%

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The Rs 5,550-crore initial public offering (IPO) of Sona BLW Precision Forgings (Sona Comstar) has been subscribed 5 percent so far on June 14, the first day of the bidding process. The public issue received bids for over 57.73 lakh equity shares against the offer size of over 10.71 crore equity shares.

Sona Comstar IPO subscribed 11% on day 1; retail portion booked 51%
The Rs 5,550-crore initial public offering (IPO) of Sona BLW Precision Forgings (Sona Comstar) has been subscribed 11 percent on June 14, the first day of the bidding process. The public issue received bids for over 1.13 crore equity shares against the offer size of over 10.71 crore equity shares.
According to the subscription data available on exchanges, at 5 pm, the portion set aside for retail investors has been subscribed 51 percent, while the non-institutional investors have put in bids for 2.34 lakh  equity shares against their reserved portion of over 2.92 crore equity shares. Qualified institutional investors are yet to put in their bids.
The public offer comprises a fresh issue of Rs 300 crore and an offer for sale of up to Rs 5,250 crore by Singapore VII Topco III Pte Ltd. The price band for the offer has been determined at Rs 285-Rs 291 per equity share
The company proposes to utilise the fresh issue proceeds for repaying debts and general corporate purposes.
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The public issue received a ‘subscribe’ rating from many brokerages on the back of the company’s strong product portfolio, growth potential in the electric vehicle (EV) segment, strong financial performance, technological capabilities, and high growth prospects.
Analysts believe the company is well-positioned to gain from high growth industry trends as well as from various initiatives introduced by the government such as the PLI scheme, which is likely to increase exports resulting in increased demand for differential gears in India.
Further, the company is continuously gaining market share across products in India and global markets, which bodes well for the growth.
“We like Sona BLW Precision Forgings given its presence in the fast-growing global EV market, diversified portfolio across categories and robust financials. The issue is valued at 74.1x FY21 P/E on a post-issue basis. Though the valuation appears fully priced in, given its thrust in the fast-evolving EV space both in India and globally, the market would like to give a premium to such an emerging growth story. Hence, we recommend subscribe for the long term,” said Motilal Oswal.

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