GNA Axles to go public, prices IPO at Rs 205-207/share

The Jalandhar-based GNA Axles, one of the largest manufacturers of rear axle shafts used in on-highway and off-highway vehicles, plans to launch an initial public offering to expand operations.

The company plans to raise close to Rs 130 crore from the IPO, with a price band of Rs 205-207 per share. The proceeds of which will be utilised for purchase of plant and machinery (around Rs 80 crore), working capital requirements (Rs 35 crore) and corporate purposes. The IPO comprises of issue of up to 6,300,000 equity shares. The net public issue comprises up to 6,100,000 equity shares and an eligible employee reservation portion of up to 200,000 equity shares.

Further, not less than 15% of the net issue shall be available for allocation on a proportionate basis to non-institutional bidders, while not less than 35% shall be available for allocation to retail individuals in accordance with SEBI regulations. The issue is slated to open on September 14 and will close for subscription on September 16.

The company, which caters to LCVs, M&HCVs and buses and also to tractors, construction equipment and speciality vehicles used in the mining and defence sectors, counts Mahindra & Mahindra, John Deere, TAFE and Tier 1 suppliers such as Automotive Axles and Meritor HVS among its key clientele.

With over 54% of its revenues from exports, GNA Axles has a strong focus on ramping up its overseas supplies even further and is looking to bag more business in new locations globally.

According to Manjit Rihal, AGM- Exports, GNA Axles, the company is preparing its facilities to cater to the rising export demand and with the fresh funding, it will ease the current manufacturing bottlenecks as well to help ramp up exports.

The company currently exports rear axle shafts and spindles to various countries including USA, Sweden, Turkey, Brazil, Italy, Germany, Spain, Mexico, Japan, UK, France, China and Australia. Among its major export customers are Meritor HVS AB, John Deere, Transaxle Manufacturing of America, Dana and Kubota Corporation of Japan.

Apart from the rising export demand GNA Axles also is betting big on the domestic tractor and Cv industry. In the domestic business, the biggest contributor of revenues is the tractor segment with nearly two-third of domestic revenues coming from the industry.

“Tractor demand is expected to grow at 8-9% (CAGR) from fiscal 2015 to fiscal 2020,” the company said while expressing a positive outlook on the domestic industry.  A better-than-expected monsoon season, after two consecutive years of scanty rainfall, and improved availability of finance for tractors are likely to be the growth drivers for the industry.

Given the positive growth outlook for both export and domestic markets, GNA Axles is hoping to take its business to the next level and with a focus on developing a diverse range of axle shafts and spindles, the Jalandhar-based company is banking upon the IPO to enhance its production capacity and garner new business. It would be interesting to see if the component maker is successful in raising the required funds through its first public offering.