Sona Comstar IPO also known as Sona BLW Precision Forgings is getting launched for subscription on Monday 14, June 2021, and will be available for subscription till Wednesday, June 16, 2021.
The company is looking to raise Rs.5,500 crore through public issue with a fresh issue worth Rs 300 crore and a offer-for-sale worth Rs 5,250 crore by a Blackstone entity, Singapore VII Topco III Pte Ltd.
Ahead of the IPO, the Sona Comstar has already raised Rs 2500 crore it has decided to allocate 8.6 crore shares at Rs 291 to 42 institutional investors, including 24 foreign portfolio investors, 11 mutual funds, five insurance companies and two alternate investment funds.
Which include Nomura Asset Management, Fidelity, Eastspring Investments, Goldman Sachs Asset Management and Amundi.
From India, SBI Mutual Fund, Axis Mutual Fund, Aditya Birla Sunlife Mutual Fund, HDFC Mutual Fund, Mirae Asset MF, SBI Life Insurance, Kotak Mutual Fund, Kotak Life Insurance and Invesco Mutual Fund were the A-list investors who subscribed to the anchor book issue.
Apart from above, Government of Singapore Investment Corporate and Monetary Authority of Singapore together made a large investment of Rs 401.5 crore in the anchor book as per the latest data.
The equity shares of sona comstar are proposed to be listed on both BSE and NSE.
The Sona Comstar IPO issue will be sold in the price band of Rs 285-291 per share and the minimum lot quantity is 51 shares and in multiples thereof translating to a minimum investment of Rs 14,841 at upper end.
The latest Grey market premium price (GMP) for Sona Comstar IPO’s were seen up by more than 21% and were trading around Rs.348 as of today, This means people are expecting it to open on listing day to be at least at Rs.345 or more.
Incase, the market falls on Monday you may see volatility in GMP of Sona Comstar.
Having said that, I would like to add here that many people underestimated Stovekraft IPO before it’s launch, however the share price made a high of Rs.545 above the pre-open IPO price band of Rs.384.
Likewise for HFFC (Home first finance) IPO, the GMP before launch was at about Rs.650 however the stock got listed at Rs.540 on the other hand for IRFC IPO many people recommended a BUY and GMP were also seen at quite high range but unfortunately it open at a discount price and is currently trading at Rs.25.40.
GMP does not mean in anyway a recommendation for an IPO, the financials of a company and its future prospectus tells a lot. Here is the thing no one can tell you whether the IPO will going to make a stellar debut or not, it is you who have to decide based on available information about the company.
Moreover the IPO’s now a days are very hot market every one wants to earn some quick money on listing day itself and there is nothing wrong about it.
Having said that, one must not forget to check the financials and do not fall for any recommendation from anyone, it is you hard earned money, you should decide whether to opt for the IPO or not.
You may have watch various YouTube channels or read on different websites about recommendation for stocks and IPO, it is my humble suggestion and request please do not ever fall prey to it. Better than this is to invest in ETF’s?.
Therefore, whenever you are buying IPO make sure the money invested is not the one which you my need it urgently, always use extra money which you may not require in near future, Otherwise stay away completely.
Now, coming back to the Sona Comstar IPO let us talk about in brief about the company and its financials and other details step by step.
About Sona BLW Precision Forgings Limited:
Sona BLW is one of India’s leading automotive technology companies, designing, manufacturing and supplying highly engineered, mission-critical automotive systems and components such as differential assemblies, differential gears, conventional and micro-hybrid starter motors, BSG systems, EV traction motors (BLDC and PMSM) and motor control units to automotive OEMs across US, Europe, India and China, for both electrified
and non-electrified powertrain segments.
The company was among the top 10 players globally in the differential bevel gear market. It is also expected to be among the top 10 global starter motor suppliers based on its exposure to the PV segment in the calendar year 2020.
The company has nine manufacturing and assembly facilities across India, China, Mexico and USA, of which six are located in India, from where they supply its products to six out of the top 10 global PV OEMs, three out of the top 10 global CV OEMs and seven out of the top eight global tractor OEMs by volume.
The company is a global supplier and it derived 75.4% of its income from the sale of goods with end-use in the overseas markets, including 40.2% in North America, 25.3% in Europe and 5.3% in China. 24.6% of its income was derived from sale of goods with end-use in India, for the nine months ended Dec 31, 2020. It is also one of the two largest exporters of starter motors from India.
Sona BLW is a technology and innovation-driven company. With a strong focus on Research and Development, the company develops mechanical and electrical hardware systems, components as well as base and application software solutions to meet the evolving demands of its customers.
The company has long-standing relationships of 15 years and more with 13 of its top 20 customers. Some of its key OEM (original equipment manufacturer) customers include Ashok Leyland, CNH, Daimler, Escorts, Escorts Kubota, Geely, Jaguar Land Rover, John Deere, Mahindra and Mahindra, Mahindra Electric, Maruti Suzuki, Renault Nissan, Revolt Intellicorp, TAFE, Volvo Cars and Volvo Eicher.
Financials Of Sona Comstar:
As of FY21, consolidated sales were at 1,566 crore with EBITDA at 441 crore (margins of 28%) and PAT at 215 crore.
As of FY21, it derived 68% of its revenue from the passenger vehicle market, with nearly 28% from differential gears, followed by micro/hybrid starter motors at 27%.
The company garners 36% of its revenue from North America, 26% from Europe, 25% in India and 7.6% from China. Its top 10 customers contribute 79.6% of the revenue, with the top two accounting for 32.3%.
Chief product lines include differential gears (27.8% of sales), differential assemblies (17.6% of sales), micro hybrid starter motors (26.7% of sales) and conventional starter motors (23.8% of sales).
The CAGR for sona comstar in last three years FY19 is 4.7%, FY20 is 3.4% and FY21 is 0.5% as of now. The company has increased sales to the electric vehicle (EV) market at a CAGR of 243.6% during FY19-FY21.
The company is truly a global auto ancillary player, deriving 75% of FY21 revenues from overseas, and serves clients across electrified and nonelectrified platforms.
SBLW is characterized by a strong technological focus, with R&D spends at 5.8% of revenues in FY21 (15% of total on roll employee count dedicated to R&D function).
SBWL provides an exciting play on electrification and possesses healthy financial strength (28% margins, 20% RoCE) but valuations proposed are rich (74x P/E on FY21 basis). Nevertheless, the company does offers a good investment case on the back of strong growth prospects for long term view.
Sona Comstar Peers Comparison:
Sona Comstar faces competition from domestic and international firms, including Bharat Forge Ltd., Motherson Sumi, CATL, Bosch Ltd, Varroc Engineering, Sundaram Clayton Td. American Axel, Auto Industries Ltd., Ramkrishna Forgings Ltd., Endurance Technologies Ltd. etc.
While the Sona Comstar IPO is a play on EV, the average PE demanded at 75 and P/B at around 10.8 times are much higher than peers. If we check the valuations asked are a bit on the expensive side.
Among the listed top 10 auto component manufacturers in India by market capitalization, Sona Comstar is the highest in terms of operating EBITDA margin, PAT margin, ROCE (return on capital employed) and ROE (return on equity), and one of the top 10 auto component manufacturers in India in terms of operating EBITDA and profit before tax in FY20.
Sona Comstar IPO Details:
Sona BLW Forgings Ltd. (Sona Comstar) will sell shares at Rs 285-291 per share in its 3 day initial public offering starting on June 14 to June 16, 2021.
The shares of sona comstar IPO will be allotted on 21 June 2021, however the Sona Comstar IPO listing date is not yet announced. The tentative date of Sona Comstar IPO listing is around Jun 24, 2021.
Sona Comstar Objects of the Offer:
Repayment of Debt = Rs.241 cr
General corporate purposes = Rs.59 cr
Total Fresh Issue Proceeds (A) = Rs.300 cr
Total OFS Proceeds (B) = Rs.5,250 cr
Total IPO Proceeds (A+B) = Rs.5,550 cr
Sona Comstar Issue break-up:
QIB – 75% of the offer – ₹ 4162 crores
NIB – 15% of the offer – ₹ 833 crores
RET – 10% of the offer – ₹ 555 crores
Promoters of Sona Comstar:
Sunjay Kapur, Sona Autocomp and Singapore Topco are the promoters of the company. While Sunjay Kapur does not directly hold any equity shares in the company, Sona Autocomp presently holds 33.7% of the pre-offer paid-up equity, and Singapore Topco holds 66.2% stake at the time of filing the RHP.
Post-IPO Blackstone and Sona Autocomp will hold 33-34% each in the company.
Frequently Asked Question (FAQ):
1.What Is The Symbol For Sona BLW Precision Forgings Limited ?
Ans: The Symbol is SONACOMS
2.When Sona Comstar IPO Coming?
Ans: The Issue Period for Sona Comstar IPO is 14-June-2021 to 16-June-2021.
3. Post Modification Period For Sona Comstar IPO?
Ans: The Post issue Modification Period for IPO is 17-June-2021 (10.00 A.M. to 11.00 A.M.).
4. What Is The Cut-off Time Period For UPI Mandate For Sona Comstar IPO?
Ans: The Cut-off time for UPI Mandate Confirmation is 18-June-2021 (upto 12:00 PM).
5. What Is The Issue Type For Sona Comstar IPO?
Ans: The Issue Type is 100% Book Building.
6.What Is The Price Band For Sona Comstar IPO?
Ans: The Price (Band) Range for SONA Comstar is Rs.285 to Rs.291 per equity share.
7. What Is The Lot Size For Sona Comstar IPO?
Ans: The Bid Lot i.e. Minimum Order Quantity (lot size) for Sona Comstar IPO is of 51 Equity Shares and in multiples thereof 51 Equity Shares.
8. Who Are The Book Running Lead Managers For Sona Comstar IPO?
Ans: The Book Running Lead Managers are, Kotak Mahindra Capital Company Limited, J.P. Morgan India Private Limited, Credit Suisse Securities (India) Private Limited, JM Financial Limited, Nomura Financial Advsiory and Securities (India) Private Limited
9. What Is The Face Value For Sona Comstar IPO?
Ans: The Face Value is of Rs.10 whereas The Tick Size is of Rs.1
10. What Is The IPO Market Timings For Sona Comstar IPO?
Ans: The IPO Market Timings is 10.00 a.m. to 5.00 p.m.
Apart from above points:
The Maximum Subscription Amount for Retail Investor is Rs. 2,00,000
The Maximum Bid Quantity for QIB Investors is 107,105,253 equity shares in multiple of 51 Equity Shares
The Maximum Bid Quantity for NIB Investors is 48,684,192 equity shares in multiple of 51 Equity Shares
The Name of the Registrar is Kfin Technologies Private Limited
The Contact person name number and Email id is Mr. M Murali Krishna, 040 6716 2222, einward.ris@kfintech.com
The Address of the Registrar is Selenium Tower B, Plot 31 & 32, Gachibowli,Financial District, Nanakramguda Serilingampally,Hyderabad 500 032,Telangana, India
Where To Check Sona Comstar IPO Application And Allotment Status?
As an investor or trader generally we are curious and anxious to know the results of the application as soon as possible. To ease the anxiety, both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have come up with dedicated pages and links which investors can use.
NSE
The NSE has an IPO bid verification module. It can be used to verify the IPO application details uploaded on the exchange bidding system by your member/bank. The data of the bid details uploaded by the member/bank would be available on T+1 day (where T would be date receipt of bid on NSE platform).
In addition, the data would be available until six days after the issue closure date. This gives the investor enough time to verify the data and instruct the member/bank to make any changes, if required.
Exchange will also provide allotment information as provided by the registrar to the issue.
An investor can avail this facility by registering using his/her PAN details. After registration, the investor will receive an email notification from NSE on the registered email address. That email will provide the login details.
The following link can be used for the same:
https://www.nseindia.com/products/dynaContent/equities/ipos/ipo_login.jsp
BSE
The BSE has also come up with a similar platform.
This unique facility allows investors to verify the status of their application submitted to a Trading Member or a SCSB (Self-Certified Schedule Banks).
The investor can check his application status/information on the website until one week after issue close.
The following link can be used by investors:
https://www.bseindia.com/investors/appli_check.aspx
Important Things To Keep In Mind Before Applying For IPO’s:
- Try to fill for the same IPO online from different DP ID i.e. if in your family have more than 1 account you can possibly get the allocation done in case of over subscription.
- You should have a good knowledge of the sector and the company you are planning to invest.
- Analysis of the company’s balance sheet is very crucial. A clear understanding of the company’s future projects and vision is very necessary to know whether it will have a sustainable future.
- Investment decision has to be taken carefully and not in a hurry.
- Read as much as you can about the company, its objectives for launching the IPO, its past history in business and its futures prospectus.
- Don’t go for hype in the news, your analysis should be based on facts rather than gossips and rumors.
- Many IPOs are oversubscribed. What this means is that the demand for shares is much higher than the shares available for sale. In such a situation, it is no surprise that many investors fail to get any shares allotted to them. This is why it is advisable to apply for IPO shares on the last day of bidding. This way, one can have a good estimate on how large the subscription will be. Also, in that case, one should bid for just one lot and not unnecessarily lock up their capital.
Conclusion:
The company commands excellent operating margins (28.9%, 26.7%,28.2% in FY19, FY20, FY21, respectively) primarily on the back of high gross margins (averaged 59% per annum in FY19-21).
This is accompanied by a capital efficient business model with healthy return ratios (average FY19-20 RoCE, RoE at 18-20%).
Let us checkout some of the strengths and risk factors for Sona Comstar Limited.
Some of the qualitative factors and strengths of Sona Comstar:
- The company is among the top 10 companies globally for differential bevel gears for PVs, CVs and tractors (5% market share).
- SBLW is also among the top 10 global players for starter motors in PVs (3% market share).
- Domestically, it is the largest manufacturer of differential gears for PV (55- 60% market share), CV (80-90% market share) and tractors (75-85% market share).
- SBLW stands apart from much of the rest of the auto component universe by providing a strong play on the upcoming mega opportunity of electrification. As of FY21, the company obtained 40% of revenues from ‘electrified’ platforms, including ~14% from pure battery EVs (BEV). This compares to 3.3% penetration of BEV in global PV production as of CY20.
Some of the Risk Factor for Sona Comstar:
- Slower than anticipated revival in auto sales volumes
- Steep rise in metal prices may hamper margins in near term
- Forex transactional impact on financials
- Factors Business dependent on the performance of the automotive sector globally, including in key markets such as U.S, Europe, India and China. Changes in conditions affecting these markets can adversely impact the business, results of operations and financial condition.
Therefore, it is always advisable to go through Sona Comstar IPO – RHP to know in detail about the company.
The only thing which should be bothering you is the research you did before applying for the IPO. Investing in IPO is risky as well as profitable.
Having said that you also need to keep in mind important things mentioned above before applying to IPO’s as the risk is always involved.
For More Information Do Checkout Basics of IPO and FAQ Here.
Do Checkout 2020 IPO Performance List – Despite Corona Most IPO Listed Gave Positive Returns!!
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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments. The above details are compiled from information available on public platforms. These are not buy or sell recommendations.
