Automotive component creator Divgi TorqTransfer Systems will convert the first company to unveil its initial public offering (IPO) in 2023. Subscription opens on March 1 and will end on March 3. The part of qualified institutional buyers is to open on February 28. The price band is Rs 560-590 per share.

Divgi is scheduled to mobilise more than Rs 412 crore via IPO, comprising a new issuance of shares of Rs 180 crore and an offer for sale (OFS) of 39.34 lakh shares by holders.

Oman India Joint Investment Fund II, Ashish Anant Divgi, Bharat Bhalchandra Divgi, Sanjay Bhalchandra Divgi, NRJN Family Trust, Arun Ramdas Idgunji, and Kishore Mangesh Kalbag are the selling shareholders. The fresh issue profits will be used to purchase equipment, while the offer for sale money will go to the selling shareholders.

Investors can bid for a least 25 shares and in multiples of 25 shares afterwards. Retail investors can invest a minimum of Rs 14,750 for a single lot and a maximum of Rs 1,91,750 for 13 lots.

The company has kept 75% of the issue size for qualified institutional buyers, 15% for non-institutional investors (high net-worth individuals, and the residual 10% for retail investors.

Divgi has logged a profit of Rs 46.15 crore for the March quarter FY22, up 21.3% over the previous year, sponsored by a good topline and operating numbers.

Operation Revenue for the year at Rs 234 crore was up 25.3% from the earlier financial year, counting Rs 213.4 crore of income from its top five clients.

On the operating front, EBDITA rose by 26.4% to Rs 65.6 crore with a margin expansion of 25 bps at 28.06% from FY21.

For the six months ending September FY23, profit stood at Rs 25.66 crore on revenue of Rs 133.72 crore.
The company has significantly reduced its borrowings from Rs 50.41 crore in FY20 to Rs 0.26 crore in FY21. The figure stands at Rs 0.5 crore by the end of September FY23.

The shareholding ratio of promoters and promoter groups is 67.18%, and non-promoters hold the rest. Divgi Holdings owns 57.32%, Jitendra Bhaskar Divgi (2.65%) and Hirendra Bhaskar Divgi (2.66%) are the company’s promoters.

Oman India Joint Investment Fund II holds a 21.71% stake, and NRJN Family Trust, which has an 8.7% stake, are the company’s major shareholder.

Praveen Purushottam Kadle is the Chairman of the Board and Independent Director, Jitendra Divgi is Managing Director, and Hirendra Divgi is a full-time Director.

Sanjay Bhalchandra Divgi, Bharat Bhalchandra Divgi, Pradip Vasant Dubhashi, Ajay Bhaskar Limaye, Pundalik Dinkar Kudva and Geeta Prafullachandra Tolia are independent directors.

The business largely depends on the company’s top five customers, and the loss of such customers or a significant reduction in purchases would adversely affect the business.

Its business may be adversely affected by fluctuations in the price or availability of raw materials and components.
The company relies on several third-party suppliers for specific vital components and raw materials for manufacturing systems and components.

The company faces the risk of foreign currency exchange rate fluctuations, which may hurt operating results, resulting in large changes in quarterly results.

The IPO allotment will be completed by March 9, 2023. The refund will be credited to the bank account of the unsuccessful investor before March 10, and the equity will be transferred to the demat account of the qualified investor before March 11.

According to the Red Herring prospectus, the company will debut on the BSE and NSE on March 14. Inga Ventures and Equirus Capital are the merchant bankers for the offering, while Link Intime India is the registrar for the offering.