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Firm Overview:
Harsha Engineers Worldwide Restricted (“HEIL”) was integrated on December 11, 2010. Part of Harsha Group, HEIL is a number one engineering firm that provides a diversified suite of merchandise throughout geographies and end-user industries. It manufactures brass, metal, and polyamide cages and stamped elements with manufacturing services positioned in Asia (India & China) and Europe (Romania). They provide a variety of bearing cages ranging from 20 mm to 2,000 mm in diameter and their bearing cages discover their utility within the automotive, railways, aviation & aerospace, building, mining, agriculture, electrical and electronics, renewables sectors, and many others. HEIL has additionally been offering complete turnkey options to all Photo voltaic Photovoltaic necessities.
Funding Rationale:
Diversified Portfolio: The corporate has a diversified product portfolio when it comes to the supplies used in addition to the scale and end-use of the completed merchandise. The corporate has roughly 50-60% of the market share within the organised phase of the Indian bearing cages market. Since incorporation, they’ve manufactured greater than 7,500 forms of merchandise within the automotive and industrial segments. They’ve lately expanded their product portfolio to introduce sand-casting, value-added stamping elements, bronze bushings, and many others. to cater to extra end-user industries resembling wind, mining, and transport sectors. The corporate provides merchandise to prospects in over 25 international locations protecting 5 continents i.e., North America, Europe, Asia, South America, and Africa. Given the large presence, their income stream is diversified each geographically in addition to throughout prospects.
Monetary Observe Document: The Firm has generated good income progress within the final 3 years. The corporate’s two-year income CAGR (FY20-22) stands at 22% and PAT CAGR stands at 104%. The corporate believes that its robust monetary efficiency displays the efficacy of the manufacturing and supply-chain administration protocols that they’ve applied whereas the regular working money flows allow them to satisfy the current and future wants of its prospects and develop new value-added merchandise.
Robust Clientele: HEIL provides bearing cages to main international bearing producers like Timken, Schaeffler (together with FAG), and SKF at their numerous worldwide places (together with India). As of March 31, 2022, the corporate provides to every of the highest six international bearing producers. The typical age of their relationship with the highest 5 buyer teams spans greater than a decade. The long-term relationship with prospects permits the corporate to know and cater to their various necessities, together with creating new merchandise.
Key Dangers:
Uncooked Materials Threat – The corporate depends upon third events for the provision of uncooked supplies and supply of merchandise. A disruption within the provide of uncooked supplies or failure of the suppliers to satisfy their obligations may impression the corporate’s manufacturing and enhance prices.
Foreign exchange Threat – The corporate is uncovered to international forex change price fluctuations, which can adversely have an effect on their outcomes of operations and trigger their quarterly outcomes to fluctuate considerably.
Outlook:
The IPO is a mixture of recent concern (Rs.455 crs) and OFS (Rs.300 crs), issued for the aim of compensation of sure borrowings, Capex for equipment, and Infrastructure repairs. The corporate’s listed friends in India in accordance with its DRHP are Timken India, SKF, Rolex Rings, and Sundaram Fasteners. The corporate’s PE ratio on the higher value band, based mostly on the EPS for FY22 will probably be round 28x which locations the corporate between an Undervalued to Pretty Valued place in comparison with the trade friends. Therefore, we offer a ‘Subscribe’ score for this IPO.
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