Basic Details About Sona BLW IPO
|BASIC DETAILS ABOUT IPO (14-16 June)|
|Bid Lot||51 shares|
|Fresh issue (Amount)||300cr|
|Fresh issue shares-cr||1.03cr|
|Total issue amount- AT Upper Band||5550cr|
|Post issue Implied Market Cap||16974|
|Post issue (Shares) Cr||58.3|
|Book Runner and Lead Managers: Kotak Investment Banking, Credit Suisse, JM Financial, J.P. Morgan and NOMURA|
On 5 July 2019 company acquired 100% equity shares of Comstar and its subsidiaries Hence Pro- forma numbers have to be looked not the restated numbers for Like-to-Like comparison.
Financials – Balance Sheet (PRO FORMA)
|% of Total Assets||15.9%||15.4%||13.4%|
|% of Total Assets||3.8%||3.1%||1.0%|
|Total PPE+Capital WIP||427||342.6||264|
|% of Total Assets||19.6%||18.5%||14.3%|
|Right of Use+Goodwill on Conso||335||317.7||281|
|% of Total Assets||15.4%||17.2%||15.3%|
|Other Intangible assets||536.6||462.9||481|
|% of Total Assets||24.7%||25.0%||26.1%|
|% of Total Assets||14.1%||10.6%||10.0%|
|% of Total Assets||19.2%||12.6%||14.8%|
|Cash and Bank balance||27.6||167||61|
|% of Total Assets||1.3%||9.0%||3.3%|
|% of Total Liabilities||59.9%||63.6%||68.4%|
|Borrowings + Lease Liability||444.7||363||179.6|
|% of Total Liabilities||20.4%||19.6%||9.8%|
|% of Total Liabilities||8.0%||5.4%||6.1%|
Financials – P&L
|TABLE 2 P&L- PRO FORMA|
|Revenue from Operation||1566||1220||1428|
|% of Revenue||45.3%||42.0%||39.4%|
|% of Revenue||21.3%||21.2%||21.9%|
|Employee benefit expenses||147||122||124|
|% of Revenue||9.4%||10.0%||8.7%|
|Depreciationa and Amortisation||97||79||72|
|% of Revenue||6.2%||6.5%||5.0%|
|PBT and Exceptional Item||314||228||326|
Change in Equity Shares
|Equity Shares||No of shares (Cr)||DATE|
|As on 31.03.2019||2.7|
|Buy Back @314||0.26|
|As on 31.03.2020||4.64|
|Bonus Issues(11:1)||52.52||On 10 Feb 2021|
|As on 31.03.2021||57.16|
ABOUT Company’s Management
NOTE: In OFS Singapore VII Topco III Pte Ltd is seeling and its shareholding will reduce from 66.28% to 34.18%. Singapore VII Topco III Pte Ltd is an affiliate of funds managed and/or advised by affiliates of the Blackstone Group.
Sanjay Kapur (Promoter Group) Chairman and Non Executive Director
- Has 21 years of experience in automotive industry
- He was the MD of Sona Koyo Steering Systems ltd( now JTKET Ltd)
- He is also co-chairman of the manufacturing council of Confederation of Indian Industry
- He is also promoter of Sona Autocomp (which holds 33.1% Post Issue in Sona BLW)
Vivek Vikram Singh (Managing Director and Group Chief Executive officer)
- Post graduate from IIM Ahemdabad.
- Was recongnized as one of the India’s 40 under forty hottest business leaders by the Economic Times in 2018
Ganesh Mani (Nominee Director )
- Currently MD with private equity business group of the Blackstone group in India.
Shradha Suri( Independent Director)
- Over 20 year experience in automotive Industry.
- She is the MD of Subros ltd
Venkata Rama Subbu Behara (BVR Subbu)
- He is an auto industry veteran who has served as the president of Hyundai Motor India and earler held position in Tata Motors
- Presently a director on the board of directors of KPIT Technology, Greaves Cotton and MTAR Technology.
Pros of Investing in Sona BLW IPO
- Company is a well globally recognized player in various segments and has Top Global clients.
- Among the top ten players globally in the differential level gear market (5% Global market share)- Contributes 28% of Total Revenue
- Amongst the top ten global starter motor suppliers (3% Global Market share)- Contributes 51% of Total revenue
- The company supplies products to six out of the top ten global PV OEMs, three out of the top ten global CV OEMs, and seven out of the top eight global tractor OEMs
Table Below Highlighting Product Segment share in overall revenue
- Company is significantly focusing on EV (Electric Vehicle) segment which is the future (expected to grow at a CAGR of 36% till 2025) and all Global Big players have already announced Big capex and various launches in coming 10 years & currently company derives 14% of revenue in FY21 which was just 1% in FY19 and in last 3 years substantial capex was done in EV as they are aggressively looking EV is the future for them.
- VW plans to have at least approximately 30% of their portfolio to be BEV(Battery Electric Vehicle) in 2030 or GM has committed $27Bn (1.97 lac cr) to EVs & AVs till 2025 or Ford has indicated that it will invest $11.5 bn(84K cr) through 2022 mainly oriented towards BEVs etc
- 2030 targets for India indicate that 70% of all commercial passenger vehicles, 30% of private passenger vehicles, 40% of buses, 80% of two-wheeler and 80% of three-wheeler sales would be electric.
- Company has been continuously increasing its R&D expenditure and the segmental focus which is EV which in itself is at early growing stage hence riding the foreseeable trend.
NOTE: As at March 31, 2021, company have been awarded 15 development programs for EV systems and components by 10 different customers, of which active production process has commenced for eight programs
|Research and Development Expenditure|
|% of Revenue||5.8%||3.3%||1.7%|
|15.4% of Companies on roll Manpower in R&D|
- IPO Proceeds will significantly reduce debt and thus Restated EPS is calculated for FY21 and DE ratio becomes very comfortable just at 0.16.
|Long Term Borrowings||191|
|Long term lease Liability||72|
|Short term Borrowing (IncludeCurrent maturing Long Term)||172|
|Short Term Lease Liability||11|
|Total Lease Liability||83|
|Total Borrowing+ Lease Liability||446|
|Proceeds used for Paying Borrowings||241|
|Current Finance cost||32.5|
|Finance cost Saved||16.5|
|Savings After Tax||12.4|
|Restated PAT for FY21||227.4|
|Restated EPS for FY21||4.0|
|Restated D/E ratio will be||0.16|
- Company revenue comes from diversified countries also interesting is company exports to China also that shows the quality of company business although North America, Europe & India are the major regions, also in spite pandemic revenue grew in FY21 and EBITDA margins is good at 28.5%
|TABLE 2 P&L- PRO FORMA|
|Revenue from Operation||1566||1220||1428|
- Company have good experienced quality management(About Management Pg.3)
Cons of Investing in Sona BLW IPO
- Of 5550cr issue, 5250 is OFS and Singapore VII Topco III Pte. Ltd whic is an affiliate of funds managed and/or advised by affiliates of the Blackstone Group is selling around 18cr share and hence Post IPO there stake will reduce from 66.3% to around 34%…So why a financial investor is selling in Big if so much potential unfolding remains.
Also to be Noted that just 4 months back 11:1 Bonus share was allotted i.e. 11 shares were allotted for every 1 share.
- Based on the peer comparison company don’t seem to have left room for investors.
|Peer Comparision||PE||PB||EV/EBITDA||D/E ratio||ROE|
- Company derives significant % of revenue from Top 10 customers around 79.6% comes from them , Top 3 customers account for 45.4%
|Anchor Book 2497.5cr|
|Government of Singapore||12.60%|
|Monetary Authority of Singapore||3.50%|
|Aditya Birla Sun Life||7.10%|
|Thronburg Developing World Fund||4.40%|