Varroc Engineering IPO – Review, Allotment Status, Subscription, Price, Date & more

Varroc Engineering IPO is launching on 26th June 2018. The Issue size of this IPO is Rs. 1945.77 Crores for up to 20,121,730 Equity Shares and the price band is Rs.965-967. 

The article herein discusses about the various details of this IPO – IPO Object, IPO Size, IPO release date, IPO price, Grey Market Price, IPO Allotment Status, Company background, Company’s financial position, Company promoters etc.


Varroc Engineering IPO Review & Ratings

Varroc Engineering IPO Ratings & Review
CriteriaRatings
Industry Sentiments7.4/10
Industry Ranking7.5/10
Company Background7.2/10
Company Reputation7.4/10
Competitive Edge7.5/10
Financial Statements7.2/10
Popularity Index7.4/10
Promoters Reputation7.4/10
Retail Appetite7.8/10
Top Brokers Review7.4/10
Overall Ratings7.4/10
Star Ratings★★★★

Summary – Varroc Engineering IPO

Varroc Engineering IPOVarroc Engineering is engaged in designing, manufacturing and supplying various auto part components which are used by the equipment manufacturers of automotive industry.

It is India’s second largest auto component group and a leading tier-1 manufacturer and supplier to Indian two-wheeler and three-wheeler equipment manufacturers. Its major clients are Bajaj, Honda and India Yamaha in India and Ford, Jaguar Land Rover, Fiat etc.

Varroc Engineering IPO is a secondary issue and it offers 20,121,730 Equity Shares which are currently held by the promoters/private investors – one such investor being Tata Capital Financial Services Limited. Of this, one lac shares have been reserved for employees of Varroc Engineering IPO. The offered equity shares constitutes around 13.75% of the post-offer paid up equity share capital of Varroc Engineering

The Varroc Engineering IPO is being handled by Kotak, Citi and Credit Suissee as global co-ordinators and global lead managers. Apart from this, IIFL is also book running lead manager for this IPO. The registrar to the offer is Link Intime.


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Varroc Engineering IPO Date

The IPO issue date of Varroc Engineering is from June 26, 2018 – June 28, 2018.

Varroc Engineering IPO Subscription

 Subscription
Day 1 (June 26, 2018)0.3284
Day 2 (June 27, 2018)1.0195
Day 3 (June 28, 2018)3.57
Day 4
Day 5

The details of subscription would be updated on a daily basis, once the IPO is released.

Varroc Engineering IPO Allotment Status

Upon releasing of Varroc Engineering’s IPO, the allotment status would be updated herein post analysis.

Varroc Engineering IPO Allotment & Listing:

  • Basis of Allotment: 3 rd July 2018
  • Refunds: 4th July 2018
  • Credit to demat accounts: 5th July 2018
  • Listing: 6th July 2018

Varroc Engineering Limited IPO Price Band

The IPO price band for Varroc Engineering is Rs 965 – Rs 967 Per Equity Share.

Varroc Engineering IPO Issue Size

Varroc Engineering IPO holds 20,121,730 Equity Shares in total. Out of this, 1,752,560 (i.e. approx 9%) shares are currently held by their promoter Mr. Tarang Jain. Further, the total offer includes  15,373,608 shares (i.e. 83%) of Omega TC Holdings Pte Ltd and balance 1,410,432 i.e. 8% by Tata Capital Financial Services Limited.

Of the total issue, 100,000 shares are reserved for the employees of the company and these will be issued to the employees at a certain discount.

Varroc Engineering IPO Equity Share Offerings

The IPO size has been mentioned as 20,121,730 Equity Shares of face value Rs 1 aggregating up to Rs 1,945.77 Crores at Issue price Rs 965 – Rs 967 Per Equity Share. The minimum order quantity is 15 shares.


Varroc Engineering Limited – Company Overview

Varroc Engineering Limited commenced operations with polymer business in 1990 and it grew organically in India by adding new business lines, such as electrical division and metallic division. Subsequently, it diversified product
offerings and expanded production capacity through various investments, joint ventures and acquisitions.

Varroc Engineering Limited also expanded its manufacturing and R&D footprint by investing in nine manufacturing plants and an additional R&D center in India since 2012. It continues to expand manufacturing and R&D footprint, and intend to set up one manufacturing facility in Brazil and one manufacturing facility in Morocco, as well as two manufacturing facilities in India.

Varroc Engineering Limited is a global tier-1 (tier-1 companies are companies that directly supply to original equipment manufacturers (“OEMs”)) automotive component group. They design, manufacture and supply exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off highway vehicle (“OHV”) OEMs directly worldwide. They are the second largest Indian auto component group (by consolidated revenue for FY2017).

Key members of Varroc Engineering Limited:

  • Naresh Chandra (Chairman and Non-Executive Director)
  • Tarang Jain (Managing Director)
  • Ashwani Maheshwari (Whole-time director)
  • Padmanabh Sinha (Investor Nominee Director)

Competitive Strengths of Varroc Engineering Limited

  • Strong competitive position in attractive growing markets
  • Strong, long-standing customer relationships
  • Comprehensive product portfolio
  • Low cost, strategically located manufacturing and design footprint
  • Robust in-house technology, innovation and R&D capabilities
  • Consistent track record of growth and operational and financial efficiency

Business strategies of Varroc Engineering Limited

  • Focus on high growth markets for Global Lighting Business
  • Focus on increasing customer revenue for India Business
  • Continue to invest in R&D, design, engineering and software capabilities in order to capitalize on future
    trends
  • Pursue strategic joint ventures and inorganic growth opportunities
  • Focus on operational efficiency

Varroc Engineerng Limited – Financial Statements

Lets have a look on the summary of financial position of Varroc Engineering Limited

Assets of the Company (in Rs. Millions)

31-Dec-1731-Mar-1731-Mar-1631-Mar-15
Total Assets65,105.4158,603.8052,458.5544,284.68
Total Revenue74,154.2197,022.6982,395.2070,384.64
Profit After Tax3,079.593,033.893,698.23168.09

Earnings per Equity Share

Earning per Equity Share (in Rs Lakh)
 Mar’17Mar’16Mar’15Mar’14Mar’13
Basic27.7438.421.354.02-2.65
Diluted27.2121.771.354.01-2.65

The numbers of the Company appear to be quite fluctuating but have been seeing an imporvement in the recent years. Further, from FY2015 to FY2017, Varroc Engineering Limited has recorded a compound annual growth rate (“CAGR”) of 17.57% in terms  of revenue.


Varroc Engineering Limited Promoters

The prominent promoter of Varroc Engineering Limited is Mr. Tarang Jain.

Interest of Promoter:

Interests of Promoter in promotion of Varroc Engineering 

The promoter, Mr. Tarang Jain, is interested to the extent of remuneration payable to him in his capacity as the
Managing Director of the Company, his shareholding in the Company and dividend or other distributions payable,
if any, by the Company in relation thereto.

Interest of promoters in property

The promoter does not hold any interest in any of the property of the Company.


Varroc Engineering IPO Offer Details or Issue Details

OfferUp to 20,121,730 Equity Shares aggregating up to Rs 1,945.77 Crores
Of which
Employee Reservation PortionUp to 100,000 Equity Shares
Accordingly,
The Net OfferUp to 18,436,600 Equity Shares
Of which:
QIB CategoryNot more than [●] Equity Shares
Of which:
 Anchor Investor PortionUp to [●] Equity Shares
Balance available for allocation to QIBs other than Anchor Investors (assuming Anchor Investor Portion is fully subscribed)[●] Equity Shares
Of which:
– Available for allocation to Mutual Funds only (5% of the QIB Category (excluding the Anchor Investor Portion))Up to [●] Equity Shares
– Balance of QIB Category for all QIBs including Mutual Funds[●] Equity Shares
Non-Institutional CategoryNot less than [●] Equity Shares
Retail CategoryNot less than [●] Equity Shares
Equity Shares outstanding prior to the offer123,127,760 Equity Shares
Equity Shares outstanding after the Offer134,811,530 Equity Shares

Varroc Engineering IPO Issue Object

The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and to carry out the Offer for Sale by Selling Shareholders. Further, Company expects that listing of the Equity Shares will enhance visibility and brand image and provide liquidity to Shareholders.

The listing will also provide a public market for the Equity Shares in India.Company will not receive any proceeds from the Offer and all the proceeds will be received by the Selling Shareholders, in proportion to the Equity Shares offered by the respective Selling Shareholders as part of the Offer.


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Varroc Engineering IPO – Basis of the Offer Price

The Offer Price will be determined by Company and the Selling Shareholders in consultation with the GCBRLMs and BRLM on the basis of assessment of market demand for the Equity Shares offered through the Book Building Process and on the basis of quantitative and qualitative factors.

The qualitative factors impacting the Offer Price are:

  • Strong competitive position in attractive growing markets;
  • Strong, long-standing customer relationships;
  • Comprehensive product portfolio;
  • Low cost, strategically located manufacturing and design footprint;
  • Robust in-house technology, innovation and R&D capabilities; and
  • Consistent track record of growth and operational and financial efficiency.

The quantitative factors which influence the offer price are:

  • EPS – The weighted average Basic EPS for latest 3 years is INR 26.90 and diluted EPS is 21.09 (based on consolidated financials)
  • Price/earning ratio
  • Industry PE ratio –  The highest and lowest are 51.64 and 40.56 vis-a-vis industry composite of 46.96
  • Return on Net Worth – The RONW at weighted average of recent 3 years is 14.19% (based on consolidated financials)
  • Net Asset Value (“NAV”) per Equity Share – NAV as on March 31, 2017 is Rs 190.51 (based on consolidated financials)
  • Comparison with listed industry peer review  –  In terms of EPS, it secures second position among the peers.

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Varroc Engineering IPO Lead Managers

Global Co-Ordinators And Lead Managers
Kotak Mahindra Capital Company Limited
Citigroup Global Markets India Private Limited
Credit Suisse Securities (India) Private Limited
Lead Manager
IIFL Holdings Limited

Varroc Engineering IPO Registrar to the Offer

Registrar of the Offer
Link Intime India Private Limited

Varroc Engineering IPO Review by Top 10 Stock Brokers

Top Stock Brokers ReviewCompany ReputationCompetitive EdgeFinancial StatementPopularity IndexPromoters Reputation
Angel Broking7.5/107.4/107.5/107.1/107.1/10
Sharekhan7.2/107.1/107.6/107.1/107.2/10
Kotak Securities7.3/107.5/107.4/107.1/107.3/10
ICICI Direct7.3/107.3/107.7/107.1/107.1/10
IIFL7.5/107.2/107.8/107.0/107.1/10
Edelweiss7.5/107.4/107.4/107.3/107.2/10
Zerodha7.4/107.1/107.5/107.1/107.0/10
5Paisa7.1/107.1/107.4/107.1/107.1/10
Karvy7.4/107.3/107.2/107.1/107.1/10
Motilal Oswal7.1/107.1/107.6/107.3/107.2/10

Varroc Engineering IPO Grey Market Premium

The Fine Organics IPO Grey Market Premium as on 28th June 2018 is Rs 45-50; Kostak Rate is Rs 400 and Subject to sauda at Rs X.


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Varroc Engineering IPO News

News 1 – Varroc Engineering plans to launch IPO

News 2 – Download Prospectus


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