Tega Industries IPO in progress: Should you subscribe to the share sale?

The initial public offer (IPO) of Tega Industries opened today. The firm plans to raise Rs 619.22 crore through the IPO at the upper end of the price band. The issue will close on December 3. The share sale has a price band of Rs 443-453 per share.

On November 30, the manufacturer of consumables for the mining industry raised Rs 186 crore from anchor investors. The company has decided to allocate 41 lakh equity shares to anchor investors at Rs 453 apiece, valuing the transaction size to Rs 185.76 crore, according to a BSE circular.

BNP Paribas Arbitrage, Goldman Sachs Funds, Ashoka India Equity Investment Trust Plc, Kuber India Fund, SBI Mutual Fund (MF), ICICI Prudential MF, HDFC MF, Axis MF, Tata MF and Aditya Birla Sun Life MF are among the anchor investors.

The initial public offering (IPO) is purely an offer for sale (OFS) of 1,36,69,478 equity shares by promoters and an existing shareholder. As a part of the OFS, promoters Madan Mohan Mohanka and Manish Mohanka will offload 33.14 lakh and 6.63 lakh equity shares, respectively.

The IPO's lot size is 33 shares for which one will have to spend Rs 14,949. A retail-individual investor can apply for up to 13 lots or 429 shares by spending Rs 1,94,337.

The allotment of shares will be finalised on December 8, 2021 and the firm will make its debut on BSE and NSE on December 13.

The objective of the offer is to achieve the benefits of listing the equity shares on the stock exchanges.

Kolkata-based Tega Industries offers comprehensive solutions to marquee global clients in the mineral beneficiation, mining and bulk solids handling industry, through its wide product portfolio.

Religare Broking is bullish on the IPO.

"We believe that the company is well placed across the value chain of mineral processing as it provides a wide range of products and solutions which are critical at different stages of mineral processing. Further, its leadership position, strong R&D, track record of developing innovative product portfolio and marquee global customers are key positives for the company," Religare Broking said, adding in the long term, the company intends to gain market share and increase penetration globally in North America, South America, Australia and South Africa.

ICICI Securities has assigned a 'subscribe' rating to the IPO.

"Tega's strong market position, innovative products  and higher entry barriers are likely to help maintain its margins while consistent growth with high repeat business (74%) would augur well in the long run. At the upper end  of the price band, it is valued at 22 times P/E for FY21, respectively," the brokerage said.

Marwadi Financial Services is positive on the prospects of the IPO.

"Considering the FY-21 adjusted earnings per share of Rs 20.58 on a post-issue basis, the company is going to list at a P/E of 22.02 with a market cap of Rs 30,031 mn while its peer namely AIA Engineering Ltd is trading at a P/E of 30.40. We assign a 'Subscribe' rating to this IPO as the company is a leading producer of specialized and 'critical to operate' products, with high barriers to replacement or substitution. Also, it is available at a reasonable valuation as compared to its peer," the brokerage said.