Varroc Engineering IPO gets fully subscribed on Day 2, sees good QIB demand

NEW DELHI: The initial public offering of Varroc Engineering was fully subscribed on the second day of the bidding process on Wednesday.

Till 5:00 pm, total bids received stood at 1,44,79,575 shares, which was 1.02 times of the total issue size of 1,41,85,212 shares, NSE data showed.

The portion set aside for qualified institutional buyers (QIBs) was subscribed 3.18 times, non-institutional investors 0.04 times and retail investors 0.22 times, according to data available with NSE and BSE.


The offer was subscribed 33 per cent on Monday.

Varroc Engineering, which supplies auto parts to Jaguar Land Rover, Bentley, Audi and Harley Davidson, raised Rs 584 crore from anchor investors including Canadian pension fund CDPQ and Smallcap World Fund Inc.


The IPO will close on June 28. At the upper end of the price band, the issue will fetch Rs 1,955 crore.

Founded in 1990 in Aurangabad, Varroc is an automotive component manufacturer and supplier of exterior lighting systems, power-trains, electrical and electronics, body and chassis parts to passenger cars and motorcycle segments worldwide.

Majority of the brokerages are bullish on the issue.

Nirmal Bang Securities in its research report says "Varroc is being offered at a PE of 28.9 times FY18 (vs domestic peer average of 41.6 times) and EV/EBITDA of 15.9 times FY18 (vs domestic peer average of 17.6x). Thus, based on the business capabilities, industry growth prospects and valuations, we recommend subscribing to the issue."

The company has a strong competitive position in attractive growing markets has a long-standing customer relationship with low cost, strategically located manufacturing and design footprint. Also, the company has a consistent track record of growth and operational and financial efficiency. "Hence, looking after all above, we recommend “Subscribe” on the issue," says Hem Securities.