Sona BLW Precision Forgings (Sona Comstar) shares surged as much as 24% over the IPO price after an hour of trade on listing day. The share price of Sona Comstar opened for trading at Rs 302 apiece, up 3.92% or Rs 11.4 premium over the IPO price of Rs 291 per share. Soon the stock was seen surging 24% higher than the Issue price, quoting a price of Rs 362.85 per share. Sona Comstar entered the market earlier this month to raise Rs 5,550 crore through a mix of fresh issuance of equity shares and offer for sale by existing shareholders. The company is a diversified manufacturer of automotive components and systems with capabilities across drivetrain parts and motor electronics. On listing the stock had a market capitalization of more than Rs 17,000 crore.
From Sona Comstar’s Rs 5,550 crore, more than 94% was an offer for sale by existing shareholder, including Singapore VII Topco, a subsidiary of private equity firm Blackstone. Post issue, promoter shareholding will drop t0 67.3% from 100% while public shareholding will increase from zero to 32.7%. Sona BLW’s IPO was subscribed 2.28 times by investors. Qualified institutional buyers (QIB) bid for issue 3.46 times while retail investors subscribed 1.58 times the portion reserved for them. Non-institutional investors (NII) failed to fully subscribe to the quota reserved for them.
Soan Comstar is a key player in the growing global electric vehicle market. “Sona Comstar stands apart from much of the rest of the auto component universe by providing a strong play on the upcoming mega opportunity of electrification. As of FY21, the company obtained ~40% of revenues from ‘electrified’ platforms, including ~14% from pure battery EVs (BEV),” brokerage and research firm ICICI Direct said in a pre-IPO note.
Brokerage firm Motilal Oswal has a positive long term view on the stock. “We like SBPFL given its presence in the fast-growing global EV market, diversified portfolio across categories and robust financials,” they said earlier in a note. “Though the valuation appears fully priced in, given its thrust in fast-evolving EV space both in India and globally, the market would like to give premium to such emerging growth story,” they added. The production of battery electric vehicles across the globe is expected to grow at 36% CAGR between 2020 and 2025, aiding the positive view voiced by analysts.