Divgi TorqTransfer’s ₹412 cr IPO to open on March 1; all you need to know

The current dry spell in India's primary market seems to be ending soon as automotive component firm Divgi TorqTransfer Systems is set to hit Dalal Street this week with its ₹412 crore initial public offering (IPO). This would be the first IPO after a gap of nearly two months after Radiant Cash Management Services’ issue in December 2022, as recent volatility in the secondary market prompted companies to defer their listing plans.

Divgi TorqTransfer Systems, a Pune-based auto parts manufacturer, will launch its IPO on March 1 and close on March 3, 2023. The IPO consists of a fresh issue of equity shares worth up to ₹180 crore, and an offer for sale (OFS) of up to 31,46,802 equity shares by promoters and other shareholders at a price band of ₹560-590 apiece. Inga Ventures and Equirus Capital are the lead managers to the issue.

Established in 1964, Divgi TorqTransfer (Divgi-TTS) is a homegrown automotive component firm, which develops and provides system level transfer case, torque coupler, and dual clutch automatic transmissions (DCT) solutions. It is one of 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. It has three manufacturing and assembling facilities across India located at Sirsi in Karnataka, and Shivare and Bhosari near Pune in Maharashtra.

Here is all you need to know about Divgi Torqtransfer Systems IPO:

Issue dates

The IPO of Divgi TorqTransfer will open on March 1 and closes on March 3, 2023. The anchor bidding will be on February 28. The share allotment will be on March 9 and credit of shares will be done on March 13. The stock is slated to be listed on domestic exchanges – the BSE and the NSE - on March 14.

Price band and lot size

The company has set a price band of ₹560-590 per share for its share sale. The lot size is 25 shares and in multiple thereof, which means a retail-individual investor can apply for up to 13 lots (325 shares worth ₹191,750).

Issue size

The company aims to raise ₹412 crore through IPO, which is a combination of a fresh issue of equity shares as well as an offer for sale by promoters and existing shareholders. The offer comprises a fresh issue of equity shares aggregating up to ₹180 crore and OFS of 3,934,243 equity shares at ₹560-590 apiece. It has cut its fresh issue size from ₹200 crore announced earlier. On the upper band of the issue price, the firm will raise around ₹412.12 crore through the issue.

The OFS comprises of up to 22,50,000 equity shares of Oman India Joint Investment Fund II, up to 14,41,441 equity shares of NRJN Family Trust (represented by its corporate trustee, Entrust Family Office Legal and Trusteeship Services Private Limited), and up to 2,42,802 equity shares by certain non-promoter shareholders of the company.

Objective of the IPO

The automotive component company proposes to utilise the net proceeds of the fresh issue to meet funding capital expenditure requirements for the purchase of equipments for its manufacturing facilities. A part of the raised capital will be also used to meet general corporate purposes.

Financial performance

For the first six month of the current fiscal ended September 30, 2022, Divgi TorqTransfer recorded a net profit of ₹26 crore, while total income stood at ₹137 crore. For fiscal year 2022, the net profit stood at ₹46 crore and total income was at ₹242 crore compared with ₹38 crore profit and ₹195 crore revenue in FY21.