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8 October 2023

Holmarc Opto-Mechatronics IPO: Navigating the World of Precision Instruments

Introduction:

Holmarc Opto-Mechatronics Limited, established in 1993, is a renowned manufacturer of scientific and engineering instruments catering to research, industry, and education. The company has recently entered the Initial Public Offering (IPO) arena.

IPO Highlights:

Holmarc Opto-Mechatronics' IPO, worth Rs 11.40 crores, consisted solely of a fresh issue of 28.5 lakh shares. The IPO bidding period commenced on September 15, 2023, and concluded on September 20, 2023, with allotment finalization on September 25, 2023. Shares of Holmarc Opto-Mechatronics were listed on NSE SME on September 25, 2023. The IPO price was fixed at ₹40 per share, with a minimum lot size of 3000 shares, requiring a minimum investment of ₹120,000 for retail investors.

Key Market Players:

Finshore Management Services Limited served as the book running lead manager of the Holmarc Opto-Mechatronics IPO, while Cameo Corporate Services Limited acted as the registrar for the issue. The market maker for this IPO was Nikunj Stock Brokers.

Stock Performance:

As of October 6, 2023, Holmarc Opto-Mechatronics Limited's stock was trading at ₹85.00, reflecting a substantial 4.94% increase. The stock opened at ₹81.00, reached a high of ₹85.05, and had a low of ₹80.00. The previous closing price stood at ₹81.00, with a total traded value of 1,47,000 shares.

Ownership Structure:

The pre-issue shareholding was at 87.30%, and post-issue, it decreased to 62.54%, reflecting changes in the company's equity structure.

Financial Insights:

As of March 31, 2023, Holmarc Opto-Mechatronics exhibited robust financials. The company's assets swelled to ₹1,658.86 lakhs, accompanied by substantial revenue of ₹2,918.44 lakhs. This marked significant growth compared to previous years. While there were modest profits in prior years, the company reported a profit after tax of ₹356.14 lakhs. The net worth improved to ₹1,159.93 lakhs, with reserves and surplus at ₹439.93 lakhs. The total borrowing stood at ₹133.69 lakhs.

Market Indicators:

Key performance indicators included a Market Capitalization of ₹40.2 crores, a Price-to-Earnings (P/E) ratio of 8.08, and a Return on Equity (ROE) of 0.36%.

Objectives of the Issue:

The net proceeds from the IPO were intended for various purposes, including:

1. Funding capital expenditure for the purchase of additional plant & machinery.
2. Meeting working capital requirements.
3. Covering issue expenses.
4. General corporate purposes.

Expert Opinion:

Highlighted that Holmarc Opto-Mechatronics operates in a highly competitive and fragmented segment. Despite this, the company has consistently posted growth in both its top and bottom lines. Based on earnings from FY23, the issue appeared reasonably priced. Informed investors may consider allocating funds for medium to long-term rewards.

Subscription Status:

The Holmarc Opto-Mechatronics IPO garnered significant interest from investors, with an oversubscription rate of 85.81 times as of September 20, 2023. Retail investors displayed strong enthusiasm, with a subscription rate of 75.78 times, while the Non-Institutional Investors (NII) category subscribed at an impressive rate of 93.27 times.

Conclusion:

Holmarc Opto-Mechatronics Limited's IPO marks its entry into the public market, showcasing its position as a leader in precision instrument manufacturing. Prospective investors should carefully analyze the company's financial performance, growth trajectory, and competitive landscape before making investment decisions. As always, a well-informed and diversified investment strategy is essential to navigate the dynamic world of IPOs.

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