IPO

Sona Comstar IPO : Sona BLW Precision Forgings Limited

SONA COMSTAR is involved in the manufacturing of automotive components. It is one of the major manufacturers in the automotive technology segment in India. The company has a high growth potential ahead given its excellence in the electric vehicle manufacturing facilities as well. It is the largest exporter in India for starter motors. The company has off-shore business in countries such as the U.S.A, Europe and China. Not only does it export to these countries but also has manufacturing and assembly facilities in China, Mexico and the U.S.A. Along with this it also has 6 manufacturing facilities across India.

IPO DETAILS

The IPO is set to get launched on 14th June, 2021. The subscription timeline extends till 16th June, 2021. The size for Soma Comstar IPO is 5550 Crore Rs. Shares issued through Offer for sale are 5250 Crore Rs. Shares worth 300 Crore Rs are issued through Fresh issue. The minimum lot size is 51 shares and the price is set at 285 Rs. – 290 Rs./ share. The company is going to get listed at both the exchanges NSE and BSE. The face value per share is Rs. 10 and this is a book built issue. The registrar for the company is Karvy Fintech Private Limited.

TABULAR REPRESENTATION OF IPO DETAILS

IPO OPENING DATE	14th June, 2021
IPO CLOSING DATE	16th June, 2021
ISSUE TYPE	Book Built Issue
Face Value per share	10 Rs
IPO price band	286 Rs. – 290 Rs.
LOT SIZE	51 shares
MINIMUM ORDER QUANTITY	51 shares
ISSUE SIZE	5550 Crore Rs.
OFFER FOR SALE	5250 Crore Rs.
FRESH ISSUE	300 Crore Rs.
LISTING AT	BSE, NSE
LISTING DATE	24th June, 2021

IMPORTANT DATES

IPO OPENING DATE	14th June, 2021
IPO CLOSING DATE	16th June, 2021
IPO ALLOTMENT DATE	21st June, 2021
REFUNDS	22nd June, 2021
DEMAT A/C CREDITED ON	23rd June, 2021
IPO LISTING DATE	24th June, 2021

The IPO begins for subscription from 14th June, 2021. The IPO subscription would continue till 16th June, 2021. The allotment status for the shareholders who applied would come on 21st June, 2021. The refunds for the ones who did not get allotment would be initiated on 22nd June, 2021. The DEMAT accounts of shareholders would be credited on 23rd June, 2021. The listing of the company would be accompanied on 24th June, 2021.

PROMOTER AND LEAD MANAGERS

There are multiple promoters for the company such as Sona Autocomp Holdings Pvt. Ltd., Sunjay Kapur, Singapore VII Topco III Pte Ltd. The holding on part of the promoter before IPO allotment was 100.00%. The post-IPO promoter holding would equal 67.30%.

The lead managers for the company are :

Kotak Mahindra Capital Company Private Limited
J.P. Morgan India Pvt. Ltd.
Nomura Financial Advisory and Securities Pvt. Ltd.
Credit Suisse Securities India Pvt. Ltd.
JM Financial Consultants Limited

OBJECTIVES FOR THE IPO

The recent COVID crisis has affected the revenue generation of the company. Due to this the creditors Payments are outstanding which has resulted in a large amount of interest payments. By the IPO Money the company aims to pay the debts.
The funds can also be utilized to fulfill some general corporate expenses of the company.
One motive can also be the exit of the promoters from the company. The given size of the IPO is too large for the company’s division. In the current IPO from 5550 Crore, 5250 Crore Rs. comes from the promoter group. This means the company is showing a way out for the long term investors and promoters and allowing the public to enter.

COMPANY FINANCIALS

Particular (in Million Rs.)	2020-21	2019-20	2018-19
ASSETS	21750	18510	16320
REVENUE	15686	10437	7025
NET PROFIT	2151	3603	1731

Sona Comstar is a well known name in India for manufacturing of automotive components. However the financials of the comparison are not that interesting in the last 2 years. The main reason is low profit generation despite the increased asset base. The company has increased its asset base every year, yet the profit generation is negative. The revenue is increasing at a steady pace but not up to the mark of the company’s potential. This could be the outcome of COVID situation as the company’s business is spread across 4 countries equally. However the company has great potential due to the upcoming wave of electric vehicles in India and across the world. Hence for a long term perspective one can consider Sona Comstar. However the major stakes lie in its future profit generation capabilities.

PROS

Diversified range of Products available
The company has high growth potential given the future of electric vehicles in India. The electric cars have started paving Indian roads and the company has an edge in that segment already. This could give great returns to investors in the next 10 years of span.
Sona Comstar has in house R&D Facilities. It also has manufacturing in India as well as in the countries where it exports its products.

CONS

Major shareholding dilution from the promoters in the IPO procedure.
Low Profit generation by the company given its asset capacity and production facilities.
High amount of debts and interest payments.