Uniparts India IPO kicks off: Should you subscribe?

Incorporated in 1994, Uniparts India is a manufacturer of engineered systems and solutions. It is a concept-to-supply player for precision products for off-highway vehicles.

The issue is entirely an offer for sale (OFS) of up to 1,44,81,942 equity shares. Investors can make a bid for a minimum of 25 equity shares and then in multiples thereof.

It is one of the leading suppliers of systems and components for the off-highway market in the agriculture and construction, forestry and mining and aftermarket sectors with a presence across over 25 countries.

The company has five manufacturing facilities, two at Ludhiana, Punjab, one at Visakhapatnam, Andhra Pradesh, and two at Noida, Uttar Pradesh. It also has a manufacturing, warehousing and distribution facility at Eldridge (US).

The company has fixed 50% of the allocation for qualified institutional buyers, whereas 15% of the allocation has been fixed for non-institutional investors. Retail bidders will get the remaining 35% of the offer.

, Dam Capital Advisors and are the book-running lead managers to the issue, whereas Link Intime has been appointed as the registrar for the same.

The majority of the brokerage firms remain positive on the issue, citing reasonable valuations, strong business models, robust growth prospects and attractive opportunities. However, being entirely an OFS is a key risk to the issue, according to analysts.

Here is what a host of brokerage firms said about the initial public offering of Uniparts India:

KR Choksey
Rating: Subscribe

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, KR Choksey said in its pre-IPO note.

“Considering the industry growth opportunities, differentiated offerings of Uniparts, expansion of the addressable market and focus on value addition, we recommend to subscribe to the issue,” it added.

Choice Broking
Rating: Subscribe

There are no comparable peers having product profiles and business models similar to it, said Choice Broking.

“Considering the global policy tailwinds like massive infrastructure capex planned by the major economies, improving mechanization in agriculture and global biases towards ‘China plus’ strategy, we recommend a subscribe rating,” it said.

Nirmal Bang Institutional Equities
Rating: Subscribe

“We believe Uniparts is being offered at reasonable valuations of 15.6x FY22 earnings considering peer valuations and future growth opportunities in the 3-PL and PMP industry,” it said with a subscribe rating.

Broking
Rating: Subscribe

The company’s strategy is to acquire new customers as well as focus on value-added products that would help in growth and margin improvement, said Religare Broking. “They have plans to explore opportunities in Europe and the US which would complement their existing business.”

They intend to focus on acquiring businesses with high growth and performance potential, along with their existing customer relationships and product and process competencies, it added with a subscribe rating.

Hem Securities
Rating: Subscribe

Its global business model, optimizing cost-competitiveness and customer supply chain risks along with long-term relationships with key global customers, including major OEMs, have resulted in a well-diversified revenue base, said Hem Securities.

“The company’s healthy financial position with robust performance metrics make this issue an attractive destination to deploy the funds in. We recommend a ‘subscribe’ rating on the issue,” it said.

Rating: Subscribe

Uniparts is an Indian-based global manufacturer of engineered systems and solutions. The group is one of the leading suppliers of systems and components for the off-highway market, said Swastika Investmart.

“It also enjoys a healthy financial position with continuous growth in revenue and profit and improving margins. The issue is attractively priced, which is lesser than its listed peers,” it added. Investors with aggressive risk appetites can subscribe to the issue.

BP Equities
Rating: Subscribe

“We feel the issue is fairly valued, given the fact that the company has healthy RoCE and RoAE ratios along with low debt,” said BP Equities with a recommendation to ‘subscribe’ to the issue.

An unexpected slowdown in tractor production due to economic headwinds and the company’s high dependency on its top customers for revenues continue to remain key risks, it added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)