Precision Camshaft looks to raise Rs 240 crore through IPO

Proceeds will be used for brownfield expansion

Camshaft manufacturer Precision Camshafts is looking to raise up to Rs 240 crore through an Initial Public Offering (IPO), for which it has already filed a draft red herring prospectus with the Securities and Exchange Board of India.

The proposed IPO, which will likely hit the markets in the coming months, is for selling up to 8.64 million equity shares. Proceeds of the issue will be used for setting up a machine shop for ductile iron camshafts at the company’s foundry unit at Solapur in Maharashtra.

In 2013-14, the company generated revenues of Rs 471.83 crore and held 8-9 per cent in the global market share in camshafts. It has an outstanding debt of Rs 152.76 as of September 2014 crore; it also has Rs 50-60 crore in fixed deposits. Eighty-one per cent equity in the company is held by its promoters.

The firm has an unused land parcel of 13 acres adjacent to its existing foundry shops from where it caters to Daimler, Porsche, General Motors and Toyota to name a few.

The company makes 150 varieties of camshafts, which go in to the heart of a car engine.

Seventy-seven per cent of its revenues come from export markets (as of 2014).

Apart from four foundry export-oriented units that operate at 90 per cent capacity, it has joint ventures in China.

About 95 per cent of its business is generated from producing cast iron camshafts and five per cent from ductile camshafts. Having recently secured contract from Toyota Kirloskar to supply ductile camshafts, the company hopes to attract more Japanese firms that use this kind of camshafts.

Yatin Shah, chairman and managing director at Precision Camshafts, said: “We are very close to the IPO and we feel the IPO will give the company its right valuation.” According to sources, the company is hitting an international roadshow for the IPO beginning with a roadshow in Mumbai.

The firm is aiming to become one of the largest suppliers of camshafts in the world. For this, Shah stated that his company is open to exploring acquisitions opportunities.