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Uniparts India IPO opens for public subscription, GMP rises; should you apply for the issue?

Uniparts India shares were commanding a grey market premium (GMP) of Rs 65-71 today. The shares of the company are expected to list on BSE and NSE on 12 December.

Uniparts India IPO opens for public subscription, GMP rises; should you apply for the issue?
Uniparts India IPO price band has been fixed at Rs 548-577 per share.

Uniparts India IPO opened for subscription on Wednesday and concludes on Friday, 2 December. The price band for the IPO has been fixed at Rs 548-577 per share. Ahead of the IPO, the company raised Rs 251 crore from anchor investors. The IPO is entirely an Offer for Sale (OFS) of 14,481,942 equity shares by promoter group entities and existing investors. Since it is entirely an OFS, the company will not receive any proceeds from the public issue. At the upper end of the price band, the public issue is expected to fetch Rs 836 crore. Uniparts India shares were commanding a grey market premium (GMP) of Rs 65-71 today. The shares of the company are expected to list on the stock exchanges BSE and NSE on Monday, 12 December 2022.

Should you subscribe to Uniparts India IPO?

BP Equities: Subscribe

“On the upper end of the price band, the issue is valued at a P/E of around 15.1x which we feel is fairly valued, given the fact that the company has healthy RoCE and RoAE ratios (31% and 26.8%, respectively for FY2022) along with low debt. We, therefore, recommend “SUBSCRIBE” to the IPO.”

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Choice Broking: Subscribe

“There are no comparable peers having a product profile and business model similar to UIL. At the higher price band, the company is demanding an EV/sales multiple of 2.2x (to its FY22 sales), which seems to be in-line to the peer average. Nevertheless, UIL has better profitability and return ratios compared to the peer average. However considering the global policy tailwinds like massive infrastructure capex planned by the major economies, improving mechanization in the agriculture and global biases towards “China plus” strategy, we feel the company has adequate levers to expand its business at higher rates. Thus, we assign a “SUBSCRIBE” rating for the issue.”

Hem Securities: Subscribe

“Company having leading market presence in global off-highway vehicle systems and components segment is engineering driven, vertically integrated precision solutions provider. Company’s global business model optimizing cost-competitiveness and customer supply chain risks along with long-term relationships with key global customers, including major OEMs, resulting in a well-diversified revenue base. Also, company’s healthy financial position with robust financial performance metrics makes this issue an attractive destination to deploy the funds in. Hence, looking after all above, we recommend “Subscribe” on issue.”

Nirmal Bang: Subscribe

“We believe Uniparts is being offered at reasonable valuations at 15.6x FY22 earnings considering peer valuations and future growth opportunities in the 3-PL and PMP industry. We recommend subscribing to the issue.”

KR Choksey Shares and Securities: Subscribe

“Compared to the listed peers, Uniparts is significantly smaller in size in terms of revenue but has superior ROCE and ROE profiles along with a lower Net Debt/ EBITDA level. Considering the upper limit of the price band and FY22 EPS, Uniparts IPO is valued at a P/E multiple of 15.6x. This is at the lower end when compared to multiples at which the listed peers are trading. Considering the industry growth opportunities, differentiated offerings of Uniparts, expansion of the addressable market and focus on value addition, we recommend that Uniparts India Limited IPO be rated ‘SUBSCRIBE’.”

Reliance Securities: Subscribe

“In view of healthy financials, strong global presence, leadership position in supply of systems and components, growing opportunities in the PMP and 3PL markets, and attractive valuation, we recommend a ‘SUBSCRIBE’ to the issue.”

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Uniparts is a concept-to-supply player for precision products for off-highway vehicles (OHVs) with a presence across the value chain. Its product portfolio includes core product verticals of 3-point linkage systems (3PL) and precision machined parts (PMP) as well as adjacent product verticals of power take-off (PTO), fabrications and hydraulic cylinders or components. In India, the company has 5 manufacturing facilities: two at Ludhiana, one at Visakhapatnam and two at Noida. During FY22, the company had an estimated market share of 16.68% in the global 3PL market in value-terms and an estimated 5.92% market share in the global PMP market in the CFM sector. Moreover, in FY22 the company’s customer base comprised over 125 customers across 25 countries.

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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First published on: 30-11-2022 at 10:46 IST