Auto component maker Craftsman Automation raised Rs 247 crore from anchor investors ahead of IPO, which will open for subscription on March 15. The company’s IPO committee in consultation with merchant bankers has decided to allocate a total of 16.58 lakh shares at Rs 1,490 to 21 anchor investors, according to a BSE circular. The anchor investors include HSBC Global Investment Funds, Tata Mutual Fund (MF), Aditya Birla Sunlife MF, The Nomura Trust and Banking Co Ltd, Max Life Insurance Co Ltd and Integrated Core Strategies Asia Pte Ltd.
What’s driving IPO frenzy?
Along with the ongoing Anupam Rasayan, five IPOs are scheduled to open next week. These include Laxmi Organic Industries, Craftsman Automation, Rakesh Jhunjhunwala-backed Nazara Technologies, Suryoday Small Finance Bank and Kalyan Jewellers India. Analysts say the ongoing enthusiasm in primary markets through IPOs, FPOs and OFS is in harmony with the current bull market rally. “Retail investors are the most excited lot subscribing to these IPOs for listing gains and nearly 78% of total stock listings in FY21 have witnessed first-day gains, the highest in at least three years,” said Nirali Shah, Head of Equity Research, Samco Securities.
Shah advised investors to remain cautious as during such times even poor-quality issues tend to see mind-boggling subscriptions. “It is safer to judge on the basis of one’s own risk appetite and liquidity requirements before holding on to these companies for the long term,” she said.
Should you subscribe to Craftsman Automation?
The public issue will be sold at a price band of Rs 1,488-1,490 per share. In the grey market on Saturday, Craftsman Automation shares were ruling at Rs 1,660, translating to a premium of Rs 170 or 11.4 per cent over the issue price. Analysts at Canara Bank Securities have given a ‘subscribe’ rating to the issue for a long-term on the back of the company’s financial performance and de-risked business model. “The company looks expensive in comparison to its peers in terms of P/E of 48.44x (annualized) and P/B of 4.19x for 9MFY21,” they said.
Craftsman Automation is supplying products and solutions for over 10 years, such as Tata Motors and Tata Cummins. Its key customers include Daimler India, Tata Motors, Tata Cummins, Mahindra & Mahindra, Royal Enfield, Mitsubishi Heavy Industries, Siemens India, Escorts, Ashok Leyland, Simpson & Company, TAFE Motors and Tractors, Perkins India, John Deere and JCB India. Manthan Mehta, Head Unlisted & Private Equity Rurash Financial Services Pvt Ltd, told Financial Express Online, company is commanding PE of 73x of FY20 EPS and 44x of FY21E EPS at the upper price band of Rs 1,490, which seems to be slightly overpriced. “However, one can apply for IPO gains,” he said.
Those at LKP Securities have also given ‘subscribe’ rating to this IPO, considering its visibility of top line growth, competitive edge, superior profitability as compared to peers, prudent cost management, return ratios, wide clientele spread across the globe, sound R&D base and technological progress.
(The recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)