As against the IPO price of Rs.967, Varroc Engineering got listed at Rs.1032 on the BSE, a premium of almost 7%. On the NSE, it got listed much lower at Rs.1015, the level at which it on the BSE currently.
The IPO was subscribed 3.6 times, mainly on the back of institutional support – their portion was subscribed 9.16 times while HNIs was subscribed 2.45 times. Retail portion response was like warm at 0.89 times.
Varroc Engineering, promoted by Rahul Bajaj’s nephew and Endurance Technologies’ Anurang Jain’s identical twin Tarang Jain, is a tier 1 auto component maker (supplying to original equipment manufacturers). Within the electric vehicle (EV) space, it enjoys a strong presence with 20% market share. As per information gathered from our sources, it counts the world’s premier EV company Tesla as one of its key clients. Company’s largest customer Bajaj Auto comprises of 18% of consolidated revenues or 50% of domestic revenues.
In our New Issue Analysis, we had said, “Company has demonstrated healthy growth historically, and its fundamentals remain sound. However it still has significant ground to cover in terms of improving margins and making inroads into the high-growth domestic passenger vehicle OEMs. Considering positive view on auto sector coupled with issue not being aggressively priced, one can apply in the IPO, preferably with a medium to long term view.”