Harsha Engineers may list at 45% premium over issue price

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Harsha Engineers may list at 45% premium over issue price

Harsha Engineers may list at a significant premium over the issue price of Rs 330 per share, despite uncertainty in the domestic equity markets. The public offer, which opened on September 14, was oversubscribed by 74.70 times on the last day of the bidding process on September 16.

Given the excellent response from the investor category, Prashanth Tapse, Research Analyst, Senior VP Research, Mehta Equities, believes that the shares of the company may list around Rs 480-500, which is more than 45- 51% premium over the upper end of the IPO price band. The price band was set to be Rs 314 -- 330 for the public offer.

The quota reserved for qualified institutional buyers was oversubscribed 178.26 times. The portion reserved for non-institutional investors and retail individual investors was oversubscribed by 71.72 times and 17.63 times, respectively.

The ask price is fairly valued when compared to its industry peers. Tapse said that allotted investors should look at booking profits for healthy listings in the current market scenario because allotted investors are very optimistic on Harsha Engineers with its dominant position and well placed to tap the growth in specialised precision components and bearing cage demand.

Aayush Agrawal, Senior Research Analyst, Swastika Investmart, echoed similar views. He believes that the company may surprise the markets and make a grand debut to list above its grey market premium.

The company's strong fundamentals, competitive advantages like high entry barriers and switching costs, experienced management team, and robust growth outlook are some of the reasons for the healthy grey market premium. The company is a proxy play on India becoming the world's largest manufacturing hub. Agrawal said that the investors should hold the allotted shares and long-term investors can accumulate the stock on dips.