Divgi TorqTransfer clears trading gains; slides 5% below issue price on NSE

Divgi TorqTransfer Systems (DTS) made a quiet debut on the stock exchanges on Tuesday. The stock was listed at a 5 per cent premium to Rs 620 on the NSE. This exceeded its issue price of Rs 590 per share. On the BSE, however, shares of the auto components and equipment maker opened at Rs 600, 2 percent higher than the issue price.

After the listing, the shares fell to Rs 561.15, 5 per cent below the issue price on the NSE. at 10:15 a.m.; it was trading at Rs 570 on NSE and BSE. It has peaked at Rs 620 on the NSE in intraday trading, as of this writing. A combined around 2 million equity shares had changed hands over the counter at the NSE and the BSE.

DTS is a leading auto auxiliary player in India having the ability to develop and provide system level transfer cases, torque couplers and DCT solutions. DTS is the largest supplier of transfer case systems to PV OEMs in India. It has three manufacturing and assembly facilities in India, one under construction for EV transmission and Dual Clutch Transmission (DCT) and is expected to be fully completed by FY24.

The company has strong and well-established relationships with several leading national and international original equipment manufacturers (OEMs) in the automotive industry, such as Tata Motors, M&M, and global suppliers such as BorgWarner. With their positioning as a systems and solutions provider and their broad product portfolio, they have been able to retain their existing customers and attract new ones.

ICICI Securities analysts had assigned a “SUBSCRIBE long-term” rating to DTS as they bet on the company’s future growth trajectory as recent valuations discount much of its healthy financial profile. “We like DTS for its technical prowess in the drivetrain space and the incremental revenue streams that lie ahead in the EV drivetrain as well as dual-clutch drivespace,” the brokerage said in a release note. to bag.

Customer concentration risk persists with the largest customer making up 50 percent of revenue and the top 5 customers making up a further 90 percent of sales. Ongoing geopolitical tensions affect exports, which now make up 10% of sales in H1FY23, up from 25% more from FY22. High reliance on imported content/raw materials (~25 percent) affecting production capacities at times of global supply chain disruption are other key risks and concerns, analysts said.

“DTS has a good market opportunity in the EV space and for automatic transmissions in the UV passenger segment thanks to strong demand. Additionally, they intend to strengthen relationships with existing customers, grow across geographies, and focus on custom-built precision components that would bode well for future growth. Lastly, its focus on R&D, cost optimization measures, local raw material sourcing and product portfolio expansion will also help fuel growth,” Religare Broking analysts said in an IPO note.