Divgi Torq Switch Programs Restricted IPO Overview: – myMoneySage Weblog

Divgi TorqTransfer Programs Restricted included in 1964, is among the main gamers within the automotive element entity that develop system-level switch circumstances, torque couplers, and dual-clutch computerized transmission options. Additionally it is the one participant manufacturing and exporting switch circumstances to international OEMs from India, and the one producer of torque couplers in India. It additionally has the potential to develop and supply transmission methods for electrical automobiles (“EVs”) and is within the strategy of designing and growing prototypes of transmission methods for EVs pursuant to the receipt of a enterprise award for this goal. The corporate additionally manufactures and provides quite a lot of merchandise beneath the broad classes of (i) torque switch methods (which incorporates four-wheel-drive (“4WD”) and all-wheel-drive (“AWD”) merchandise); (ii) synchronizer methods for guide transmissions and DCT; and (iii) parts for the above-mentioned product classes for torque switch methods and synchronizer methods in guide transmission, DCT, and EVs.

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The corporate has three manufacturing and assembling services throughout India positioned at Sirsi in Karnataka, and Shivare and Bhosari close to Pune in Maharashtra, with the manufacturing services at Shivare and Bhosari being strategically positioned in proximity to its key shoppers, and one under-construction manufacturing facility positioned at Shirwal, Maharashtra. The corporate caters to the subsequent technology of shoppers like Toyota, Mahindra & Mahindra, and Tata Motors. The corporate has stamped its international footprint being a trusted provider to prospects in UK and USA within the west to China, Thailand, Korea, and Japan within the east.

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Promoters & Shareholding:

Jitendra Bhaskar Divgi, Hirendra Bhaskar Divgi, and Divgi Holdings Non-public Restricted are the promoters of the corporate.

Pre Situation Share Holding 67.18%
Put up Situation Share Holding

Public Situation Particulars:

Supply on the market: OFS of approx. 3,934,243 fairness shares at Rs. 5, aggregating as much as Rs. 232 Cr and contemporary of approx. 3,050,847 fairness shares at Rs. 5, aggregating as much as Rs. 180 Cr.

Complete FPO Dimension: Rs. 412 Cr.

Worth band: Rs. 560 – Rs. 590.


  • To buy tools/ for manufacturing for sustaining a excessive degree of precision of gears and parts required for the manufacture of EV transmissions.
  • To improve the services to satisfy the demand and to enhance productiveness to convey down manufacturing prices.
  • Normal company functions.

Bid qty: minimal of 25 shares (1 lot) for Rs. 14,750 and most of 13 tons.

Supply interval: Mar 1, 2023 – Mar 3, 2023.

Date of itemizing: Mar 14, 2023.

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  • It is among the main gamers supplying switch case methods to automotive OEMs in India.
  • It’s the largest provider of switch case methods to passenger automobile producers in India.
  • They’re amongst the only a few suppliers in India who’ve the potential to develop and supply system-level switch circumstances, torque couplers, and DCT options.
  • Strategically positioned manufacturing services able to producing high-precision parts assembly system-level design intent.
  • Lengthy-term relationships with marquee home and international prospects.
  • Skilled promoters and robust management.


  • The corporate’s enterprise largely relies upon upon our high 5 prospects, and the lack of such prospects or a major discount in purchases by such prospects can have a cloth hostile impression on its enterprise.
  • Its enterprise might be adversely affected by volatility within the worth or availability of uncooked supplies and parts.
  • Relies on some third-party suppliers for sure key parts and uncooked supplies used for manufacturing.
  • Delays or defaults in buyer funds and receivables could adversely impression its income and have an effect on our money flows.
  • Uncovered to international forex alternate price fluctuations danger.

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Subscribe or keep away from?

Sectorial outlook – The Indian PV trade focuses on the home market, which accounts for 80 – 85% of the manufacturing. Throughout fiscal 2022, home demand contributed ~84% of demand. After a consecutive contraction, auto finance disbursement confirmed a wholesome revival in fiscal 2022. Most sub-segments witnessed underlying asset gross sales recovered to pre-Covid ranges. Two-wheeler and passenger automobile segments gained on account of pent-up demand and elevated choice for private mobility as lockdowns had been lifted and folks had been cautious of utilizing public transport. Within the CV section, whereas gross sales of medium and heavy business automobiles (M&HCV) and buses stay tepid, that of sunshine business automobiles (LCV) improved. All the above are anticipated to have a constructive impression on the sector by which the corporate is closely investing. Throughout fiscal 2023, auto trade gross sales are witnessing wholesome development, thrusting the auto finance disbursements. Disbursements for the PV section are estimated to witness sharp development backed by the expectation of a file (24-26%) rise in PV gross sales. Furthermore, elevated traction for high-priced UVs coupled with worth hikes undertaken to compensate for the rise in commodity costs is predicted to offer an extra push to the disbursement ranges.

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The financials (income and internet revenue) are proven within the graph under:

Valuation – For the final 3 years common EPS is Rs. 14 and the P/E is round 41.92x on the higher worth band of Rs. 590. The EPS for FY22 is Rs. 16.76 and the P/E is round 35.2x. If we annualize Q2-FY23 EPS of Rs. 9.32, P/E is round 31.4x. It has Sona BLW Precision Forgings Restricted (69.8x), Bosch Restricted (37.7x), ZF Business Automobile Management Programs India Restricted (71.8x), Sundram Fasteners Restricted (43.7x) and Endurance Applied sciences Restricted (37.5x) as its listed friends as per the RHP. The corporate’s P/E is between 41.9x and 31.4x. ROA is round 5.9%, ROE and ROCE are at the moment 7.2% and 11.95% respectively. Revenues and EPS have been rising persistently and the margins have additionally been constant and in step with friends.

Advice – Divgi TTS is certainly one of India’s main Tier 1 corporations within the design, improvement, and manufacturing of superior drivetrain parts and methods. It has provided software program embedded electronically managed switch circumstances and torque couplers for high OEMs corresponding to Tata Motors, Mahindra & Mahindra Restricted, amongst others.

   After contemplating all of the elements the itemizing nonetheless appears to be moderately priced taking a look at its present financials therefore we might advocate traders to “Subscribe” to this IPO from a medium to long-term perspective.


This text shouldn’t be construed as funding recommendation, please seek the advice of your Funding Adviser earlier than making any funding determination.

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