Harsha Engineers IPO: How good is it?

In our previous part of Harsha Engineers IPO story, we read about the key details of the IPO. Here we will answer some questions about Harsha Engineers and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? Yes. Harsha Engineers' profit before tax for FY22 was Rs 126.6 crore. 2) Will Harsha Engineers be able to scale up its business? Yes. The company's overall capacity utilisation in each plant is around just 60 per cent and it's also raising money through this issue to fund the purchase of machinery. Thus, it will be able to scale its business quite easily. 3) Does Harsha Engineers have recognisable brands truly valued by its customers? Not applicable. Since the company is involved in B2B supply of homogeneous products, the concept does not apply. But the repeat customers usage indicates that the company has good impression among its clients. 4) Does Harsha Engineers have high repeat customer usage? Yes. The company has a strong relationship with its customers and has high repeat customer usage. Its average age of relationship with the top five customers is more than a decade. 5) Does the company have a credible moat? No. While the company is a leader, it does not possess any moat as there are bigger competitors and bearing companies with in-house manufacturing too. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? No. Harsha Engineers has two manufacturing plants and various warehouses located around the world. The two manufacturing plants contribute 27 per cent to the total revenue. At present, the company's plant in Ro