Divgi TorqTransfer Systems Limited IPO

Apply 0
Avoid 0

i. Divgi TorqTransfer Systems is  amongst the very few suppliers in India who have the capability to develop and provide system level transfer case, torque coupler and DCT solutions. They are one of the leading players supplying transfer case systems to automotive OEMs in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India.

ii. They are also the only player manufacturing and exporting transfer cases to global OEMs from India, and the only manufacturer of torque couplers in India.

iii. The company is in the process of designing and developing prototypes of transmission systems for EVs pursuant to receipt of a business award for this purpose

iv. They manufacture and supply a variety of products under the broad categories of
(i) torque transfer systems (which includes fourwheel-drive (“4WD”) and all-wheel-drive (“AWD”) products);
(ii) synchronizer systems for manual transmissions and DCT; and
(iii) components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs.

v. They have also developed
(i) transmission systems for EVs;
(ii) DCT systems; and
(iii) rear wheel drive manual transmissions.

vi. They are one of the few companies who serve both as systems level solution provider as well as component kit supplier to global OEMs and Tier I transmission systems suppliers.

vii. The company has an in-house software development capability which helps it in providing system level solutions offering software that controls the vehicle dynamics. They are also one of the first few suppliers of steel and carbon-based synchronizer systems for the Indian markets, and are one of the leading manufacturers of steel synchronizers in India.

viii. The company has three manufacturing and assembling facilities across India located at Sirsi in Karnataka, and Shivare and Bhosari near Pune in Maharashtra, with the manufacturing facilities at Shivare and Bhosari being strategically located in proximity to our key clients, and one under-construction manufacturing facility located at Shirwal, Maharashtra. They have purchased 10 acres of land at Shirwal near Pune in Maharashtra and commenced construction which will help them in expanding their manufacturing capacity including for manufacture of DCT and EV transmissions.

Competitive Strengths

i. Strategically located manufacturing facilities capable of producing high precision components meeting system-level design intent.
ii. Long-term relationships with marquee domestic and global customers.
iii. Experienced board of directors and senior management team supported by skilled and qualified workforce.

 

 

 

 

 

Objects of the Divgi TorqTransfer Systems Limited IPO:

The Company proposes to utilize the Net Proceeds from the Fresh Issue towards the following objects: i. Funding capital expenditure requirements for the purchase of equipment/machineries of the manufacturing facilities; ii. General corporate purposes.  
DRHP of Divgi TorqTransfer Systems Limited IPO
RHP of Divgi TorqTransfer Systems Limited IPO

Divgi TorqTransfer Systems Limited IPO Details:

Open Date: Mar 01 2023
Close Date: Mar 03 2023
Total Shares: 6985090
Face Value: ₹ 5 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 412 Cr.
Lot Size: 25 Shares
Issue Price: ₹ 560-590 Per Equity Share
Listing At: NSE,BSE
Listing Date: Mar 14 2023

Promoters And Management:

Praveen Purushottam Kadle is an Independent Director on the Board. He has received a bachelors’ degree in Commerce, Accounting and Auditing from the University of Bombay and has qualified as a Chartered Accountant in 1982, received certificate of merit of Cost and Management Accountant in 1983 and qualified as a Company Secretary in 1983. He is the Chairman of Prachetas Capital Private Limited. He was associated with Tata Information Systems (an IBM and Tata Company) as Vice President (Finance) and Secretary in 1992 and as Vice President (Finance) at Tata Engineering and Locomotive Company Limited in 1996. He was associated with Tata Capital Limited as the managing director in 2008 and as an advisor to Tata Sons Limited in 2018. He has received a number of awards in recognition of his outstanding contribution to Tata Motors Limited, which are: CNBC-TV18, the best performing CFO in the Auto & Auto Ancillaries sector in 2006, the ‘CFO of the year’ by IMA in 2004, and has been inducted as Founding Member to the CFO Hall of Fame in India. Jitendra Bhaskar Divgi is the Managing Director on the Board. He has received a bachelors’ degree in Mechanical Engineer (Honours) from The Birla Institute of Technology & Science, Pilani in the year 1985 and has received a Master’s of Science Degree in Manufacturing from the University of Massachusetts, USA in the year 1986. Before joining Divgi Metalwares in 1994, he worked at Digital Equipment Corporation, Massachusetts. He served on the Board of Directors of BorgWarner, China in 2000, and was associated with BorgWarner till 2005. Hirendra Bhaskar Divgi is a Whole-time Director on the Board. He has a bachelor’s degree in Mechanical Engineering from the University of Bangalore. He joined the Company in 1988 and has served in various capacities such as the new product development manager and has also worked in the role of controller operations at Company. He has over 30 years of experience working at the Company.  

Financials of Divgi TorqTransfer Systems Limited IPO:

Particulars ( In Crore ) 6MFY23 2022 2021 2020
Revenue from Operations 133 233 186 159
Other Income 3 8 8 11
Total Revenue 137 241 195 170
Cost of Materials Consumed 54 93 68 56
Changes in inventories 0.29 0.07 -2 2
Employee Benefits Expense 13 22 21 19
Other Expenses 28 51 45 44
EBITDA 40 73 60 48
Depreciation & Amortisation 6 11 7 6
Finance Cost 0.14 0.16 0.18 4
EBIT 34 62 52 42
OPM (%) 29.75% 30.47% 30.94% 28.47%
PBT 34 62 52 37
Taxes 8 16 14 9
PAT 25 46 38 27
NPM (%) 18.48% 19.13% 19.52% 16.29%
No.of Shares 3 3 3 3
EPS 7.36 13.40 11.02 8.06
P/E 80.13 44.02 53.49 73.19

Comparison With Peers:

Name of the Company Revenue (Cr) Profit (Cr) P/E EPS CMP Mcap (Cr)
Divgi TorqTransfer Systems Limited 241 46 37 16.80 590 1800
Sona BLW Precision Forgings Limited 1,939 354 73.52 6.22 461 26,987
Bosch Limited 11,782 1,217 41.44 413.10 17,800 52,456
ZF Commercial Vehicle Control Systems India Limited 2,543 142 124.83 74.90 10,400 19,718
Sundram Fasteners Limited 4,902 462 45.10 21.74 982 20,638
Endurance Technologies Limited 7,549 461 44.61 32.75 1,280 18,003

Recommendation on Divgi TorqTransfer Systems Limited IPO:

Review and Recommendation of Divgi Torque IPO by IZ team is 6/10 1. Divgi-TTS is amongst the very few automotive component entities in India who have the capability to develop and provide system level transfer case, torque coupler and dual clutch automatic transmissions (“DCT”) solution. 2. They are in the process of designing and developing prototypes of transmission systems for EVs also. 3. Products include; a) Torque transfer systems for (“4WD”) and all-wheel-drive (“AWD”). b) synchronizer systems for manual transmissions and DCT 4. Divgi-TTS has 3 manufacturing and assembling facilities across India located at Sirsi in Karnataka, and Shivare and Bhosari near Pune in Maharashtra. 5. Revenue has grown up from 1590 Crores in FY20 to 2337 Crores in Fy22. A decent 21% CAGR growth. 6. The business has Gross Margins of 60%, EBITDA Margins of 28%, and NPM of 20%. This is pretty good margins. 7. In FY21-22, the company has ROCE of 15.94% and ROE of 13.57%. 8. Total cash generated in the last 3 years from operations is 115 Crores and Total Capex done was 78 Crores. That means in the last 3 years all the capex is done via internal accrual. They have also reduced the debt from 50 Crores in Fy20 to almost Nil in Fy22. 9. Company has paid dividend of ~8 Crores in the last 3 years. 10. The peer are trading at an average P/E of 50x, while Divgi-TTS is coming at P/E of 36x, so some room is left for listing gains. 11. The fund raised in the IPO is ~412 Crores, out of which 180 Crores is the fresh issue which will be used for Capex and rest is OFS, wherein the existing investors like Nandan Nilkeni Family Trust, and promoters are taking partial exit to book profit. 

Lead Manager of Divgi TorqTransfer Systems Limited IPO:

  1. Equirus Capital Private Limited
  2. INGA Capital Private Limited

Registrar of Divgi TorqTransfer Systems Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Divgi TorqTransfer Systems Limited Plot No. 75, General Block, MIDC Bhosari, Pune 411026 Phone: +91 020 – 27302000 Email: sckadrolli@divgi-tts.com Website: http://www.divgi-tts.com/

Discussion on Divgi TorqTransfer Systems Limited IPO:

1 Comment

Leave a Reply