Harsha Engineers International Limited IPO

Harsha Engineers International Limited incorporated on May 11, 1921, is a leading engineering company that offers a diversified suite of products across geographies and end-user industries. The company’s market share is estimated to be around ~50-60% in the Indian bearing cages market, making it the largest manufacturer of precision bearing cages in the organized sector in India in terms of revenues and amongst the leading manufacturers of precision bearing cages in the world. It also accounted for a share of 6.5% in the global organized bearing brass, steel, and polyamide cages market in CY2021. The company’s business comprises i) an engineering business, under which we manufacture bearing cages (in brass, steel, and polyamide materials), complex and specialized precision stamped components, welded assemblies, and brass castings and cages & bronze bushings; and ii) solar EPC business, under which we provide complete comprehensive turnkey solutions to all solar photovoltaic requirements.

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HEIL has 4 strategically located manufacturing facilities for its engineering business with one of its principal manufacturing facilities at Changodar and one at Moraiya, near Ahmedabad in Gujarat in India, and one manufacturing unit each at Changshu, China, and Ghimbav Brasov in Romania.

Promoters & Shareholding:

Rajendra Shah, Harish Rangwala, Vishal Rangwala, and Pilak Shah are the company promoters.

Pre Issue Share Holding99.70%
Post Issue Share Holding74.60%

Public Issue Details:

Offer for sale: OFS of approx. 9,090,909 equity shares at Rs. 10, aggregating up to Rs. 300 Cr and Fresh issue of approx. 13,787,878 equity shares at Rs. 10, aggregating up to Rs. 455 Cr.

Total IPO Size: Rs. 755 Cr.

Price band: Rs. 314 – Rs. 330.

Objective: For pre-payment or scheduled repayment of a portion of the existing borrowing, capital expenditure, and Infrastructure repairs and renovation.

Bid qty: minimum of 45 shares (1 lot) for Rs. 14,850 and maximum of 13 lots.

Offer period: 14th Sep 2022 – 16th Sep 2022.

Date of listing: 26th Sep 2022.

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  • One of the leading manufacturers of precision bearing cages in the world.
  • It has a diversified suite of precision engineering products across geographies and end-user industries.
  • Long-standing relationships with leading clientele.
  • Strategically located production facilities.
  • Professional and experienced management team.


  • Even though the company has long-standing client relationships, they are dependent on a limited number of customer groups for a significant portion of revenue from the engineering business.
  • The company is exposed to foreign currency exchange rate fluctuation risks.
  • It depends on third parties for the supply of raw materials and delivery of products.

Also read : SIP (Systematic Investment Plan) could be the key to your wealth creation

Subscribe or avoid?

Sectorial outlook – The index of Industrial production is an index to track manufacturing activity in an economy. On a cumulative basis, IIP grew by 11.4% in FY22. However, this high growth is mainly backed by a low base of FY21. The FY22 IIP is higher by 2.0% when compared with the pre-pandemic level of FY20, suggesting that while economic recovery is underway, it is still nascent but Healthy growth in credit off-take, gradual revival in the consumption sentiment, improving capacity utilization levels and strong government spending are some positives for industrial growth in FY23. The global bearings market was valued at USD 85.2 billion in 2015 and grew to USD 106.1 billion in the year 2019 at a CAGR of 5.6%. In 2020, it declined due to covid lockdowns but in 2021 market grew at an annual rate of 12%. The expected growth in the usage of bearings in several applications such as mining, automotive, heavy machinery, infrastructure development, power generation, and construction is forecasted to drive the demand for bearings market and it is expected to grow at a CAGR of 6% to 8% over the period 2021 to 2029 and is estimated to be valued at USD 171.7 billion in the year 2029.

The financials (revenue and net profit) are shown in the graph below:

Valuation – For the last 3 years average EPS is Rs. 8.5 and the P/E is around 39 x on the upper price band of Rs. 330. The EPS for FY22 is Rs. 11.09 and the P/E is around 30x. It has Timken India Ltd (63x), SKF India Ltd (59x), Rolex Rings Ltd. (36x), and Sundaram Fasteners Ltd (39x) as listed peers as per the RHP. The company P/E is between 39x and 30x. Net margins and EPS have been growing consistently. Looking at the valuation, it seems to be fairly valued.

Recommendation – The company has been consistently growing with solid financials and it also has a high market share (nearly a monopoly). After considering all the factors the listing still seems fairly valued with good prospects hence we would recommend “Subscribe” to this IPO for investors in a medium to long-term perspective.


This article should not be construed as investment advice, please consult your Investment Adviser before making any sound investment decision.

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