Divgi TorqTransfer Systems is a well-known Indian automotive component manufacturer that specializes in producing drivetrain systems, including axles, gearboxes, and transmission components. The company is currently planning to launch an IPO, and many investors are wondering whether it is worth investing in.
In this article, we will provide a detailed analysis of Divgi TorqTransfer Systems’ IPO, including its financial performance, growth prospects, and risks associated with the investment. Our goal is to help you make an informed decision about whether or not to invest in this IPO.
Divgi TorqTransfer IPO Details
| Divgi TorqTransfer IPO Dates | 1 – 3 March 2023 |
| Divgi TorqTransfer IPO Price | INR 560 – 590 per share |
| Fresh issue | INR 180 crore |
| Offer For Sale | 3,934,243 shares (INR 220.32 – 232.12 crore) |
| Total IPO size | INR 400.32 – 412.12 crore |
| Minimum bid (lot size) | 25 shares (INR 14,750) |
| Face Value | INR 5 per share |
| Retail Allocation | 10% |
| Listing On | NSE, BSE |
Company Overview
Divgi TorqTransfer Systems was founded in 1991 and has grown into one of India’s leading automotive component manufacturers. The company’s products are used in a variety of vehicles, including passenger cars, commercial vehicles, and tractors.
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Financial Performance
In the past few years, Divgi TorqTransfer Systems has shown steady growth in its revenue and profitability. According to its draft red herring prospectus (DRHP), the company’s revenue grew from Rs. 221.6 crores in FY19 to Rs. 276.6 crores in FY21, representing a CAGR of 12.3%. Similarly, its net profit grew from Rs. 17.6 crores in FY19 to Rs. 28.6 crores in FY21, representing a CAGR of 34.5%.
| Period Ended | Total Assets | Total Revenue | Profit After Tax | Net Worth | Reserves and Surplus | Total Borrowing |
|---|---|---|---|---|---|---|
| 31-Mar-20 | 303.70 | 170.74 | 28.04 | 209.53 | 203.51 | 50.41 |
| 31-Mar-21 | 362.88 | 195.03 | 38.04 | 295.88 | 288.99 | 0.26 |
| 31-Mar-22 | 405.37 | 241.87 | 46.15 | 340.02 | 326.25 | 0.12 |
| 30-Sep-22 | 430.21 | 137.55 | 25.66 | 356.20 | 342.44 | 0.50 |
Growth Prospects
Divgi TorqTransfer Systems has several growth prospects that make it an attractive investment option. The company plans to use the proceeds from the IPO to expand its manufacturing capabilities and invest in research and development. Additionally, the Indian automotive industry is expected to grow at a CAGR of 5.5% between 2021 and 2026, which bodes well for Divgi TorqTransfer Systems’ growth prospects.
Risks
While Divgi TorqTransfer Systems has shown impressive growth in recent years, there are also risks associated with investing in the company. For instance, the automotive industry is highly cyclical and dependent on economic conditions, which could impact the company’s revenue and profitability. Additionally, the company faces intense competition from other players in the industry, which could affect its market share.
Divgi TorqTransfer Systems IPO Tentative Timetable
| Event | Tentative Date |
|---|---|
| Opening Date | Mar 1, 2023 |
| Closing Date | Mar 3, 2023 |
| Basis of Allotment | Mar 9, 2023 |
| Initiation of Refunds | Mar 10, 2023 |
| Credit of Shares to Demat | Mar 13, 2023 |
| Listing Date | Mar 14, 2023 |
Divgi TorqTransfer Systems is the leading players supplying transfer case systems to automotive OEMs in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India.
Positive factors include a strong financial track record, niche market with high entry barriers, diversified customer base, and experienced management team. Its IPO price is also fairly priced.
Negative factors include dependency on a few large customers, exposure to risks such as currency fluctuations and competition, limited diversification, and limited visibility into the long-term due to the impact of the COVID-19 pandemic.
Considering all these factors, investors can invest in this IPO with medium to long term perspective.
Conclusion
In conclusion, Divgi TorqTransfer Systems’ IPO is an attractive investment opportunity for investors looking to invest in the Indian automotive industry. The company has a strong financial performance and several growth prospects that make it an attractive investment option. However, investors should also be aware of the risks associated with the investment, including the cyclical nature of the automotive industry and intense competition.
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