Sona Comster IPO: The Rs 5500 crore IPO of Sona BLW Precision Forgings (Sona Comster) has opened for subscription on Monday, June 14 and bids can be placed till Wednesday, June 16. Under this IPO, fresh equity shares worth Rs 300 crore are being issued while the rest is through Offer for Sale (OFS) by existing shareholders including Blackstone-linked Singapore VII Topco III Pte Ltd. Sona Comster is one of the leading Auto Components Manufacturers in the world. Apart from this, it is also playing a major role in the electric vehicle segment in the domestic market. Post the issue, the promoter’s shareholding will come down to 67 per cent while the public shareholding will increase to 33 per cent.
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Bids can be placed in lots of 51 shares
Investors can place bids for the issue in lots of 51 shares. The price band for the issue has been kept at Rs 285-291 per share i.e. for subscription, investors will have to bid at a minimum of Rs 14,841 against the upper price band of Rs 291. 75 per cent of the total issue is to Qualified Institutional Buyers (QIBs), 15 per cent to non-institutional investors and 10 per cent to retail investors. Prior to the issue, the company has allotted 85,824,742 equity shares worth Rs 2497 crore to anchor investors. Anchor investors include Government of Singapore, SBI Mutual Fund, Nomura India Investment Fund, Fidelity Funds, Goldman Sox, HDFC Mutual Fund, IIFL Fund. Most of the experts have given it a subscribe rating for the long term.
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Most of the analysts advised to subscribe
- According to analysts at Motilal Analysts, the electric vehicle (EV) market is growing rapidly globally and the growth prospects are good due to Sona Comster’s presence in the sector and its diversified products. According to analysts, this IPO can be subscribed for long term.
- According to analysts at ICICI Direct, Sona Comster’s dominant presence in the EV segment can give better returns to investors. In the financial year 2021, the company got 40 percent of its revenue from electrified products, of which 14 percent of the revenue came from EV batteries. According to analysts, not just EVs, Sona Comster’s global presence and diversified products make it a positive investment for investors. In such a situation, ICICI Direct has also given it a subscribe rating for the long term.
- Despite several analysts giving a subscribed rating to the Sona Comster IPO, some other analysts are concerned about its high valuations. According to Aditya Kondawar, Founder and COO, JST Investments, the price of Sona BLW IPO in the Rs 291 price band is 77.6x P/E and 12.8x P/BV, which is very high for a company that has no growth in the last three years. Has not happened. Apart from this, according to Kondawar, the company is demanding 10.8x price to sales, which is very high. Hence, JST Investments advises against investing in it as many other listed peers are available at 1x or less price to sales.
(Article: Kshitij Bhargava)
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