Divgi TorqTransfer Systems IPO update: Retail investors oversubscribe, bid 1.56 times of quota on Day 2; GMP rises

Divgi TorqTransfer Systems’ Rs 412 crore IPO opened for subscription on 1 March and the issue has been booked over 38% on day 2, with total bids of 14.5 lakh shares. Qualified institutional buyers (QIBs) haven’t demonstrated much interest in the issue so far, subscribing for 6% of their reserved portion. Retail investors oversubscribed for the issue, bid for 1.56 times of the shares reserved for RIIs. The NII portion garnered 22% bids so far. The IPO will close for subscription on Friday, 3 March.

The price band for the IPO has been fixed at Rs 560-590 a share. Divgi TorqTransfer Systems IPO comprises a fresh issue of shares worth Rs 180 crore and a sale of 39.3 lakh shares by promoters and shareholders, including by Oman India Joint Investment Fund and Nandan Nilekani (Family Trust).

Ahead of the IPO, the company raised Rs 185 crore from anchor investors. At the upper end of the price band, the public issue is expected to fetch Rs 412 crore. The maximum number of shares a retail investor can bid for is 13 lots comprising 325 shares, amounting to Rs 1,91,750. Divgi TorqTransfer Systems shares were commanding a grey market premium (GMP) of Rs 70 on Thursday. The shares of the company are expected to list on the stock exchanges BSE and NSE on Tuesday, 14 March 2023.

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Analysts have advised investors to subscribe to the issue. “We assign SUBSCRIBE for long term rating on DTS given that our bet is on future growth trajectory at the company as trailing valuations discount much of its healthy financial profile. We like DTS for its technical prowess in transmission space & incremental revenue streams coming on broad going forward in EV transmission as well as Dual Clutch transmission space,” said Choice Broking in a report.

Divgi TorqTransfer Systems Limited is an automotive component entity. The company has the capability to develop and provide system-level transfer cases, torque couplers, and dual-clutch automatic transmission solutions. Divgi TorqTransfer Systems serves as both, systems-level solution providers and component kit suppliers, to global OEMs, such as Tata Motors and Mahindra & Mahindra, and Tier I transmission systems suppliers.