Divgi TorqTransfer Systems IPO review by Anil Singhvi: Subscribe or Avoid? Check recommendation

Divgi TorqTransfer Systems IPO review by Anil Singhvi: The Initial Public Offering (IPO) of Pune-based auto component manufacturer Divgi TorqTransfer Systems is now open for subscription. The three-day subscription window will end on March 8. The company has priced its IPO between Rs 560 and Rs 590 per share. At the upper band, the company aims to raise Rs 412 crore. 

The IPO comprises a fresh issue of Rs 180 crore and an offer for the sale of up to Rs 232 crore by Oman India Joint Investment Fund and Nandan Nilekani (Family Trust).

Zee Business Managing Editor Anil Singhvi has recommended subscribing to the public issue for the long term. He, however, suggested that investors should subscribe in less quantity and add if the listing takes place below the issue price.

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According to Singhvi, the automotive component maker has a strong promoter background and the growth outlook also looks strong. He said that the company is positioning itself as per the new generation demand which is a "big positive". He further said that Divgi TorqTransfer Systems has reported good growth in the last 2-3 years. 

Talking about the financials, The Zee Business Managing Editor said that the automotive component maker has healthy financials with robust operating margins as compared to the competitors in the industry. 

Also Read: Divgi IPO details 

The company’s 74 per cent business comes from Mahindra and Mahindra and overall, 90 per cent comes from only five companies which can be a concern, he said, adding that the valuations are reasonable and investors should invest for long term. 

Divgi TorqTransfer supplies transfer case systems to automotive Original Equipment Manufacturing (OEMs) in India and is the largest supplier of transfer case systems to passenger vehicle manufacturers in India. The company also exports manufactured transfer cases to global OEMs and is the only manufacturer of torque couplers in India.

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