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Sona Comstar IPO Review with Today's GMP

Sona Comstar IPO
Source: LinkedIn


Sona Comstar IPO opens on 14th June and closed on 16th June, 2021. The comapny is planning to collect Rs 5,550 crores which comprises fresh issue of equity shares worth of Rs 300 crores and offer for sale (OFS) of Rs 5,250.

In this article we covers all the important information related to company and IPO, also we have covered the Grey market premium for the shares. 


🖥 Table Of Contents:

Sona Comstar IPO Review-

  1. About Company:
  2. Fundamentals of the Company:
  3. Strengths:
  4. Threats:
  5. Important Dates and Details:
  6. Objective of Issue:
  7. Grey Market Premium (GMP):

1) About Company:


The company have started its journey in 1995 with a business name of 'Sona Okegama Precision Forgings'. This was a joint venture between Sona Group and Mitsubishi Materials. After aquiring the 25% stakes in Mitsubishi Materials and Thyseen Krupp's, the corporate is renamed as Sona BLW Precision Forgings.

 The core business of the company is designing, manufacturing, supplying superior quality of automobile components like small spare parts, geers and starter motors etc. 
 
Today, the company is the leading player in automobile components manufacturing. The company has good customer base in India and across the world. The company is the largest exporter of starter motors for India. The company has it's 9 manufacturing plants and assembly facilities in which 6 is in India, single in USA, Maxico and China. 


2) Fundamentals Of the company:


There is no much data available for the comapny financials but from the below table you can get an idea of the company's financial situation. 


Particular's March 2021 March 2020 March 2019n
Total Assets 21,748.30 18,506.82 16,325.57
Total Revenue 15,686.41 10,437.65 7,025.01
Profit After
Tax
2,151.65 3,603.43 1,731.80

As you can see that the assets of the company is increasing which shows that company is working on expanding the business. The revenue of the company is also increasing yoy basis from last 3 years. The profit of the company is increasing in last year. But, the profit of the company is declined in this year which may be due to lockdown and restrictions. Also, the material cost is also increased in this period which impacted the profit of the company. 

In last 3 years the ROE of the company is increased from 35.6% in FY19 and 35.2% in FY20 to 36.4% in FY21. Where as, ROCE was declined in this period from 40.3% in FY19 and 29% in FY20 to 34.8% in FY21 respectively. 

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3) Strenghts:

  • The company have its presence not in India but also in foriegn countries like China, USA, Maxico etc. 
  • The company have good relationship with its customers like Ashok Leyland, Daimler, Escorts, Maruti Suzuki, Jaguar and Land Rover, Mahindra and Mahindra, Jhon Deere, Renault Nissan etc. Which have good competitive image in the corporate world. The company have maintained its realtion with these company's from last 15 years. 
  • The company gives more important to innovations. So, it expends heavily on research and development activities. The company have expended around Rs 165.35 crores on R&D activities. 
  • The company is also providing components of Electric vehicles also, so the company have good future scope. The EV market sales of the company is increased with compounded annual growth rate of 35%.
  • The company have experienced board which can tackle the any kind of tough situations. 


4) Threats:

  • The major part of the company's revenue from its 10 customers. If the company loss one of these customers then company have to suffer from huge losses. 
  • The company have huge debt and to repay this debt company is listing its shares. 
  • The P/E of the company is 77.39 which is higher than industry P/E of 33.06.
  • Covid 19 pandemic or other health issues have adverse effect on company's business as company is suffering to get the raw materials. 

5) Important Dates and Details:

Sona Comstar IPO Details:

Opening DateJun 14, 2021
Closing DateJun 16, 2021
Issue TypeBook Built
Face valueRs 10 per equity share
IPO PriceRs 285 to Rs 291 per eq shares
Market Lot51 shares
Listing AtBSE, NSE
Issue Size[.] Eq shares of Rs 10 each
(Aggregating up to Rs 5,550 crores)
Fresh Issue[.] Eq shares of Rs 10 each
(Aggregating up to Rs 300 crores)
Offer for sale[.] Eq shares of Rs 10 each
( Aggregating up to Rs 5,250 crores)



Tentative Timetable:

Opening DateJun 14, 2021
Closing DateJun 16, 2021
Basis of AllotmentJun 21, 2021
Initiation of RefundJun 22, 2021
Credit of shares in Demat accountJun 23, 2021
Listing DateJun 24, 2021



6) Objective of Issue:


The fund which company is raising is utilized for following purpose:
  • Repayment/ prepayment of  debts of the company either fully or partially. 
  • For General corporate purpose. 

7) Grey Market Premium(GMP):


The GMP of the company share gives an idea about the listing price of the shares whether it list on discount or on premium. The GMP Of Sona Comstar IPO is in fluctuating manner. The GMP of the company for past one week are :

GMP of SONA COMSTAR IPO
Source: Google| Created by ipowatch.in

You can check today's GMP of Sona Comstar IPO on ipowatch.in.


Closing Thought:


According to our point of view as the GMP of the company is in fluctuating manner we have to wait for second day premium. If the premium goes up you can apply for the IPO. At this time as the GMP is just Rs 20 and market is on top a small correction may lead to listing on discount. So, wait till second day or you can go for Shyam Metalics IPO which today GMP is Rs 150.

I hope you like this article if you have any query write in comment box. Also, write in which IPO you are going to apply Sona Comstar or Shyam metalics. 

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