Precision Camshafts goes public, floats IPO to raise Rs 410 crore

Precision Camshafts Ltd (PCL) is all set to go public and has launched an initial public offer to raise Rs 240 crore through a fresh issue of shares along with an offer for sale of 91,50,000 shares, with a face value Rs 10 each.

The issue opens on January 27 and closes on January 29. The price band is fixed at Rs 180 to Rs 186 per equity share. The total offer size is between Rs 405-410 crore at the upper and lower limits of the price band. The minimum bid lot is 80 equity shares and thereafter in multiples of 80. The equity shares are proposed to be listed on the NSE and BSE.

The net proceeds of the issue would be utilised for setting up a new machine shop for ductile iron camshafts at the export-oriented unit and for general corporate purposes.

Precision Camshafts supplies over 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications. Among its several clients are global original equipment manufacturers like Ford Motors, Hyundai, General Motors, Maruti Suzuki, Tata Motors and Mahindra and Mahindra. Recently, the company also bagged its first Japanese client in the form of Toyota Motors, which will use camshafts for its new models in India.

Speaking to reporters at the sidelines of the press conference, Yatin Shah, chairman and managing director at Precision Camshafts said that the global PV camshafts market is pegged at 130 million units per annum, with the company having 10% share globally. He expects a steady growth of 4-5% per annum in demand for the next few years and hopes that PCL will grow faster than the industry itself.

“We are looking at a 20% market share globally in the next five years. A lot of it would come from the inorganic route and we are currently scouting for niche machining companies to acquire as well,” revealed Shah.

Adding that PCL would also diversify into validation process along with manufacturing in the future, Shah said that the move would help in de-risking the business.

Given the current market volatility and weak investor sentiment, one could ask whether this is the correct time to come out with an IPO. However, merchant bankers believe that for credible companies with a good track record, market conditions do not matter, and PCL is hopeful of successfully closing the issue on the stipulated date.