Tega Industries IPO: All You Need To Know
The three-day IPO will open on Dec. 1.
Tega Industries Ltd. will launch its three-day initial public offering on Wednesday, joining more than 90 companies that listed on the bourses this year amid a record run in the stock market.
The IPO is a pure offer for sale by promoters and existing arm of private equity firm TA Associates, the Kolkata-based company said in its red herring prospectus. The maiden offer constitutes 20.6% of the post-issue equity of the company, with the promoters holding 79.2% after the share sale.
Issue Details
Offer for sale: Rs 619 crore.
Price band: Rs 443-453 apiece.
Market value at the upper end of the price band: Rs 3,003 crore.
Face value: Rs 10 apiece.
Lot size: 13 shares and multiples.
Listing: NSE and BSE.
Lead managers: Axis Capital, JM Financial.
Tega Industries, according to an F&S report, is one of the leading manufacturers and distributors of specialised ‘critical to operate’ and recurring consumable products for the global mining and mineral processing industry, on the basis of sales as of June. It’s the second-largest producer of polymer-based mill liners, on the basis of revenue as of June.
Where Will The Money Go
The money raised from the IPO will not go to the company. The offer-for-sale proceeds will go to the promoter and investors offering shares in the issue.
The company claims it’s net cash positive in the balance sheet and does not need any fund requirement for growth. All future capital expenditure will be funded out of internal accruals.
Business
Tega Industries offers comprehensive solutions to marquee global mining clients in mineral beneficiation (the first step in extraction of metal from natural resources), mining and bulk solids handling industry.
Its product portfolio of specialised abrasion and wear-resistant rubber, polyurethane, steel and ceramic-based lining components are used across different stages of mining and mineral processing, screening, grinding and material handling, including after-market spends on wear, spare parts, grinding media and power.
The company has six manufacturing facilities — three in India (at Dahej, Gujarat, and at Samali and Kalyani, West Bengal) and another three in Chile, South Africa and Australia.
Exports contributed 86.42% of its revenue in the fiscal ended March 2021. Over the last three fiscals, Tega Industries had a presence in 513, 498 and 479 installation sites, respectively, in more than 70 countries. For the quarter ended June, it was present in 212 installation sites.
Its focus end-customers are mineral processing sites involved in gold and copper ore beneficiation, accounting for 34.92% and 27.25% of the sale of products at the end of the April-June quarter.
Financials
Tega Industries has only released results for the three months ended June with no disclosure of the comparative quarter in the previous fiscal. The second-quarter financials for the ongoing fiscal are also not disclosed.
The company said nearly 40% of its revenue comes in the first half of the fiscal and the rest in the second half, as most of the orders are linked to the financial year of its customers which is mostly as per the calendar year.
Peers
Tega Industries’ operations are comparable with AIA Engineering Ltd.
Risks
Its global manufacturing facilities, sales and operations exposes the company to the risks of doing business in foreign countries like Chile.
It is dependent on third-party logistics and support service providers for the delivery of raw materials and finished products. Any disruptions in their services, including transportation services or a drop in quality of their services, may adversely affect business.
Any shortfall or delay in the supply of raw materials or an increase in raw material costs, may adversely affect pricing and supply of products. Though it has a price pass-on policy, the effect may take a quarter or two to reflect.
It is dependent on a few key suppliers of certain raw materials and does not have long-term contracts or exclusive arrangements with these key suppliers. The loss of or a significant reduction in supply by such suppliers could adversely affect business.
Depreciation of the Indian rupee and exchange rate fluctuations in currencies, in which it does business or have outstanding borrowings, may impact business.