Uniparts India Ltd is a global manufacturer of engineered systems and solutions. It is a leading supplier of systems and components for the off-highway market in the agriculture, construction, forestry & mining (CFM) etc. It provides a comprehensive solution of high-quality, critical products and components for Off Highway Vehicles (OHV) . It has end-to-end solutions ranging from product conceptualization, design, prototyping, testing, development and assembly to customised packaging and delivery. The company’s product portfolio includes core product verticals of 3-point linkage systems and precision machined parts as well as adjacent product verticals of power take off, fabrications and hydraulic cylinders and its components.
Uniparts India Ltd is based in India with six manufacturing facilities and four warehousing locations across India, US and Europe. Its products are used in over 25 countries. It was incorporated in 1994 by Mr.Gurdeep Soni the chairman and managing director. It aims to become a significant global business and supply partner of core systems in agriculture and construction.
Uniparts Group has at last successfully launched its IPO after 3 failed attempts. Uniparts IPO was opened on 30 Nov 2022 and will close today the 2 Dec 2022. The IPO is expected to raise Rs.836 crores. The price band is ₹548 to ₹577 per share. The lot size is 25 shares and a retail investor can apply for a maximum of 13 lots. The allotment will be done on 7 Dec and listing is expected on 12 Dec 2022.
The promoters shareholding will reduce from 75.54% to 65.79% after the IPO. The complete IPO is only an offer for sale by the existing shareholders, hence no capital will be raised for the company. By the end of the 2nd day of the IPO the issue was oversubscribed 2 times.
The allocation is 35% to retail investors, 15% to (non institutional Investors) NII’s and 50 % to (qualified institutional buyers) QIB’s. The group has consistently grown in net worth in the past 3 fiscal years making this a good investment for short term and medium term investors. Most brokerage houses have given it a “Subscribe” rating.
Uniparts profits have grown from Rs. 62.64 cr in the fiscal year 2020FY to Rs. 93.15 cr in the fiscal year 2021. In the year 2022 it recorded a profit of Rs. 166.89 cr. The group has shown a sharp improvement in its top and bottom lines making this IPO a very reasonably priced one. It is currently selling at a GMP( grey market premium) of Rs.68 per share.
The lead managers of the issue are Axis Bank, Dam Capital Advisors and JM Financial. Link Intime has been appointed as the registrar.
The pros of Uniparts are:
- It leverages integrated precision engineering capabilities and an established global business model, to tap additional business opportunities and expand to addressable markets
- It focuses on higher value addition products and enhanced service offerings to improve the margin profile.
- It targets new customer accounts and expands existing customer accounts.
- It enhances engineering, innovation and design competence.
The risks of Uniparts are:
- Dependence on a limited number of customers. For 3PL business ~75.7% of the total business came from its top ten customers as of FY22.
- The issue is only OFS (offer for sale) and UIL will not receive any proceeds from the IPO. So no plans for expansion.
- Sustainability of EBITDA margin above long term average.
- 70% of revenue from operations as of June 2022 is from outside India. The risk of recession in US, Europe markets and foreign currency risks may impact the business.
Uniparts India Limited is a much awaited IPO. Although it is only via offer for sale it is oversubscribed. Uniparts has a niche market and its consistent financial performance are making it a sought after IPO. It is priced reasonably and has been given a subscribe rating by most firms. Look out for the listing on 12 Dec 2022.
Recent IPOs listed at the premium are Bikaji Foods IPO, Keystone Realtors IPO and Archean Chemicals IPO.
Disclaimer: The investments discussed or recommended in the market analysis, research reports, etc. may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting such independent advisors as may be necessary.