Objects of the issue:
- To carry out the offer for sale
- To achieve the benefits of listing the equity shares on the stock exchanges.
Investment Rationale:
key customer groups provides it with a strategic advantage in ensuring cost-effectiveness, quicker delivery, and faster turnaround times. With the Company’s continuous investments in facilities and capabilities, they have been able to develop an efficient, technology-driven manufacturing process that has led them to manufacture products as per the requirements and specifications of the customers in a cost-effective manner.
Valuation and Outlook:
The global market for 3PL systems (~56% of FY2022 revenues) is expected to grow at a CAGR of 6% – 8% through CY2026, aided by strong global tractor production volumes. With India accounting for about 50% of the global tractor production, we believe that Uniparts India is in a sweet spot to leverage this opportunity going forward. Additionally, multiple business drivers such as fully integrated engineering solutions, long-term relationships with OEMs, the strategic location of manufacturing
and warehousing facilities, global footprint, and geographically diversified revenues should provide further tailwinds to the business. However, an unexpected slowdown in tractor production due to economic headwinds and the company’s high dependency on its top customers for revenues continue to remain key risks. On the upper end of the price band, the issue is valued at a P/E of around 15.1x which we feel is fairly valued, given the fact that the company has healthy RoCE and RoAE ratios
(31% and 26.8%, respectively for FY2022) along with low debt. We, therefore, recommend “SUBSCRIBE” to the IPO.
