Divgi TorqTransfer Systems IPO Details
The Divgi TorqTransfer Systems IPO will begin on March 01 and end on March 03. Divgi TorqTransfer System’s initial public offering (IPO) is expected to raise about 412.12 crores, consisting of a 180 crores new issue and an offer to sell of 232.12 crores at a Face value of ₹ 5 per share.
Divgi TorqTransfer Systems Limited, a company founded in 1964, operates as a supplier of automotive parts. They are one of the very few Indian companies that can design and offer torque couplers, dual-clutch automatic transmission solutions, and system-level transfer cases.
It is one of the top companies in India that supplies transfer case systems to automotive OEMs, is also the country’s biggest provider of transfer case systems to manufacturers of passenger cars. Not only that, but they are the only company in India that produces and exports transfer cases to international OEMs. They are also the only company that makes torque couplers.
Divgi TorqTransfer Systems Limited produces and distributes a variety of goods, including:
- All-wheel-drive (“AWD”) and four-wheel-drive (“4WD”) products are examples of torque transfer systems.
- DCT and manual transmission synchronizer systems;
- Components for the aforementioned product categories of EVs, DCTs, and torque transfer systems and synchronizer systems.
Objective of the Issue
It is proposed that the Fresh Issue’s net proceeds be used as follows:
- Funding capital expenditure requirements for the purchase of equipment/machineries of the manufacturing facilities
- General Corporate purposes.
| Divgi TorqTransfer Systems IPO | Details |
|---|---|
| Price Band | ₹560 to ₹590 per share |
| Face Value | ₹ 5 per share |
| Issue Size | 412.12 Crs |
| Fresh Issue | 180 Crs |
| Offer for Sale | 232.12 Crs |
| Opening Date | 01 Mar 2023 |
| Closing Date | 03 Mar 2023 |
| Allotment | 09 Mar 2023 |
| Initiation of Funds | 10 Mar 2023 |
| Credit to Demat | 13 Mar 2023 |
| Listing Date | 14 Mar 2023 |
| Pre Issue Share Holding | 67.8% |
| 1 lot | 25 Shares (₹ 14,750/-) |
| Retail Quota | 10% |
| QIB Quota | 75% |
| NII Quota | 15% |
| Retail (Min) | 1 Lot (25 Shares ~ ₹ 14,750/-) |
| Retail (Max) | 13 Lots (325 Shares ~ ₹ 1,91,750/-) |
| S-HNI (Min) | 14 Lots (350 Shares ~ ₹ 2,06,500/-) |
| B-HNI (Min) | 68 Lots (1700 Shares ~ ₹ 10,03,000/-) |
| Promoters | Jitendra Bhaskar Divgi, Hirendra Bhaskar Divgi and Divgi Holdings Private Limited |
| Draft Red Herring Prospectus | DRHP |
| Red Herring Prospectus | RHP |
| Grey Market Premium | Click Here |
| Allotment Status | Check Here |
The Divgi TorqTransfer Systems IPO’s bid period is from March 01, 2023, at 10:00 A.M., to March 03, 2023, at 5:00 P.M. UPI Mandate confirmation must be received by 5 PM on the day the issue closes.
EBITDA & PAT (in Crs)
EBITDA– Earnings Before Interest Tax Depreciation & Amortization PAT – Profit After Tax
Total Assets, Share Capital and Borrowings (in Crs)
Revenue Growth (in Crs)
Peer Comparison
| Particulars | Divgi TorqTransfer Systems Limited | Sona BLW Precision Forgings Limited | Bosch Limited | ZF Commercial Vehicle Control Systems India Limited | Sundaram Fasteners Limited | Endurance Technologies Limited |
|---|---|---|---|---|---|---|
| Face Value | 5 | 10 | 10 | 5 | 1 | 10 |
| EPS | 16.76 | 6.22 | 413.10 | 74.90 | 21.74 | 32.75 |
| PE | 35.20 (taking 590 as the listing price) | 73.52 | 41.44 | 124.83 | 45.10 | 44.61 |
| RoNW% | 13.57 | 18.07 | 11.41 | 6.72 | 17.52 | 11.75 |
| ROE | 13.60 | 20.60 | 11.80 | 6.30 | 18.30 | 12.50 |
| Debt to Equity Ratio | 0 | 0.04 | 0.01 | - | 0.29 | 0.09 |
Analysis:
If we analyse the financial parameters of Divgi TorqTransfer Systems, then it can be clearly seen that the firm is on the growth path with both EBITDA and PAT increasing on year to year basis. Total assets of the company are increasing and in its borrowings are continuously decreasing on YOY basis. Now, firm has almost zero debt. This firm’s revenue growth is also good.
Taking the EPS as 16.76 as per RHP, PE ratio is 35.20 which is on the lower side if compared with the peers however, it is on the higher side in comparison to the Industry PE of 20.95. This simply depicts that the IPO price is on the higher side but we cannot say anything without considering other fundamental parameters.
RoNW of 13.57% & EBITDA margin of 28.10% as per RHP, are comparable to its peer companies. But if you compare its own Pat Margin growth then it is on the growth path and it can be confirmed by checking the revenue from operations which is also steadily increasing on YOY basis. This depicts that the company is on the growth path.
ROE of 13.60 as per RHP, is good in comparison to its peers and with low levels of debts, this parameter indicates that the returns generated were good. Overall, this IPO seems to be good for long term investment as it is almost zero debt firm with one of the few suppliers in the field of DCT solutions, transmission systems for EVs, torque coupler. With a number of prestigious domestic and international OEMs in the automotive industry, including Tata Motors and Mahindra & Mahindra, as well as with international suppliers like BorgWarner, it has solid and long-standing ties.
Currently market is bearish and is in correction phase so grey market premium and subscription status should be checked in order to get the listing gains.
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