LKP Research IPO report on Harsha Engineers International
HEIL manufactures bearing cages (including cylindrical roller cages, spherical roller cages, deep grove cages, angular contact cages, thrust roller cages and taper roller cages), complex and specialised precision stamped components, welded assemblies and brass castings and bushings. Since their incorporation, they have manufactured more than 7,500 types of products in the automotive and industrial segments. They manufacture bearing cages in brass, steel and polyamide which represents 6.5% of the global organised outsourced bearing (brass, steel & polyamide) cages market in CY 2021. They have recently expanded their product portfolio to introduce sand-casting; value-added stamping components, bronze bushings etc. to cater to more end user industries such as wind, mining and shipping sectors. Their products find application across automotive, aviation and aerospace, construction, mining, agriculture, electricals and electronics, renewables sectors.
Valuation and Outlook
At the higher price band of ₹330, HEIL is valued at 27.7x FY22 earnings of ₹11.9 which in our view is reasonable compared to its peers. The company with its strong market share in precision bearing cages and being one of the leading players globally in organized bearing cages, having strong clientele with long standing relationship provides healthy return ratios and visibility going ahead. We recommend investors to SUBSCRIBE to the IPO of HEIL.
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