Sona Comstar IPO reportedly largest ever for automotive component maker in India

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  • If successful, Sona ComstarThe IPO of is said to be the largest ever for an automotive component maker in India.
  • The Blackstone-backed company supplies mission-critical, highly technical automotive components to OEMs from companies such as Ford Motors, Daimler, Tata Motors, Ashok Leyland, among others.
  • The electric vehicle boom also boosted Sona Comstar’s business, contributing 13% to the company’s revenue.

Sona Comstar, one of India’s leading auto component manufacturers, is preparing to launch its 5,500 crore initial public offering (IPO) next week, according to media reports.

The Gurugram-based company had filed its draft red herring prospectus (DRHP) in February this year, with plans to raise 6,000 crore from the IPO. But reports suggest the offer has been reduced to 5,500 crore.

Sona Comstar is backed by US private equity giant Blackstone. On the 5,500 crore IPO, the Blackstone Group subsidiary, Singapore VII Topco III, would earn ₹ 5,200 crore. The remaining 300 crore will be raised through a new share issue.

If successful, the Sona Comstar IPO is said to be the largest auto component maker IPO in the history of the Indian company.

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Reports suggest that the IPO could be launched as early as next week, when markets are at an all-time high and investors are interested in a new company just starting out on the stock exchanges.

Upper and lower results of Sona Comstar over the last four reporting periodsSona Comstar / Business Insider India / Thrive

Understanding the activity of Sona Comstar

Sona Comstar is a supplier of highly technical and critical automotive systems. It supplies components to original equipment manufacturers (OEMs) of global auto giants like Ford Motors, Daimler and at home, Tata Motors and Ashok Leyland, among others.

The boom in the electric vehicle (EV) market around the world has boosted Sona Comstar’s outlook – 13% of its revenue comes from supplying the Battery EV segment.

It has nine manufacturing and assembly plants located in India, China, the United States and Mexico, including six in India.

According to the Association of Automotive Component Manufacturers (ACMA), exports of automotive components are expected to reach $ 80 billion by 2026. In FY20, exports amounted to $ 14.5 billion.

Industry revenue, on the other hand, is expected to reach $ 200 billion by 2026. It stood at $ 49 billion in FY20.

Here’s what Sona Comstar plans to do with its IPO proceeds

The company’s prospectus states that of the new issue of 300 crore, 225 crore will be used to pay off certain loans, which will help reduce its cost of financing.

The remaining 75 crore is used for general corporate purposes, which includes capital expenditure, working capital requirement, and marketing expense, among others.

Sona Comstar also revealed that she will not receive any proceeds from the 5,200 crore offer for sale.

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