Introduction:
Initial Public Offering (IPO) is a buzzword among investors. A flurry of IPOs - belonging to emerging sectors and new-age technology-driven companies - have hit the D-street recently. As we move on to the ninth month of 2023, the IPO bandwagon refuses to slow down.
Rishabh Instruments Limited - a global energy efficiency solutions provider - has geared up to raise Rs. 491 crore from its IPO, which opens for public subscription on 30 August. Read on to learn more about the Rishabh Instruments IPO and decide if you should invest.
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About Rishabh Instruments Ltd:
Incorporated in 1982, Rishabh Instruments Limited is a global energy efficiency solutions provider. It supplies a range of electrical measurements, electrical automation, and process optimization equipment, such as analog panel meters, rotary cam switches, current transformers, shunts, and power factor controllers. The company also provides aluminum high-pressure die-casting solutions for close-tolerance fabrication.
As per the F&S report, Rishabh Instruments Ltd. is the leading manufacturer of analog panel meters worldwide. It is also among the leading global manufacturers of low-voltage current transformers. As of March 2023, the company’s business is spread across 70 international destinations with a strong European presence, thanks to its subsidiary Lumel Alucast. Furthermore, it has manufacturing facilities with R&D abilities in India, Poland, and China.
Strengths of Rishabh Instruments Ltd:
- Technology and innovation-driven company with advanced research and development (R&D) capabilities
- Global business presence in large addressable markets and poised to benefit from mega industrialization trends
- Diversified product portfolio backed by robust manufacturing facilities
- A large customer base across the globe with long-standing relationships
- Successful track record of acquiring profitable businesses across geographies
- An integrated business model facilitating cost-effectiveness and a smooth customer supply chain
- Owns some well-recognized brands in its industry, including ‘Rishabh’, ‘Lumel', ‘Sifam’, and ‘Tinsley’
- Boasts a highly experienced management team
Key risks or weaknesses of Rishabh Instruments Ltd:
- The company is highly dependent on its manufacturing facilities for smooth revenue generation
- Failure to fulfil orders on time may impact customer relationship
- A major portion of the IPO proceeds will be used for the expansion of the Nashik manufacturing facility
- A significant chunk of revenues comes from international clients
- Fluctuations in foreign currency exchange rates can impact the profit margin
- Business operations are subject to local government regulations
Financial Snapshot:
Given below are the financials of Rishabh Instruments Ltd. The data is as per the company’s Draft Red Herring Prospectus (DRHP):
| Particulars |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 |
| Revenue from Operations |
5,695.40 |
4,702.50 |
3,899.56 |
| EBITDA |
863.17 |
826.32 |
700.21 |
| EBITDA Margin |
15.16% |
17.57% |
17.96% |
| Profit After Tax (PAT) |
496.87 |
496.52 |
359.4 |
| PAT Margin |
8.57% |
10.35% |
8.93% |
| Net cash generated from operations |
275.08 |
132.82 |
529.34 |
| ROCE |
13.77% |
15.20% |
12.60% |
| ROE |
12.39% |
14.58% |
12.01% |
| Debt-Equity Ratio |
0.26 |
0.28 |
0.31 |
| Asset Turnover ratio |
1.12 |
1.17 |
1.27 |
*Amount in Rs. Million
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Here are a few takeaways from the above-mentioned table:
- The company’s revenue in the last two fiscal years has grown consistently and robustly at around 20%
- The profits have remained steady with a stable profit margin in the 8% to 10% range
- The Return on Equity (ROE) is around 12% to 15%, which is good considering it’s a capital-intensive business
- The asset turnover ratio is moderate ranging between 1.1 to 1.3, indicating the company’s strength
Details of the Rishabh Instruments Ltd:
Rishabh Instruments Ltd. plans to raise Rs. 491 crores through its IPO, comprising a fresh issue of 1.7 million equity shares and an offer-for-sale of up to 9.43 million equity shares. The IPO opens for public bidding on 30 August 2023 and will remain open till 1 September. The shares can be listed on the exchanges on 11 September. As a retail investor, you can bid for at least 34 shares (1 lot) and in multiples thereof in the price band of Rs. 418 to Rs. 441 per share.
| IPO Date |
30 Aug 2023 to 1 Sep 2023 |
| Listing Date |
11-Sep-23 |
| Face Value |
Rs. 10 per share |
| Price Band |
Rs. 418 to Rs. 441 per share |
| Lot Size |
34 shares |
| Total Issue Size |
11,128,858 shares (aggregating up to Rs. 490.78 crores) |
| Fresh Issue |
1,700,680 shares (aggregating up to Rs. 75 crores) |
| Offer for Sale |
9.428,178 shares (aggregating up to Rs. 415.78 crores) |
| Issue Type |
Book-built IPO |
The final verdict
Rishabh Instruments Ltd. has a strong global presence with robust R&D capabilities. It operates in an industry with high growth potential. Considering the impressive ROE and asset turnover ratio, the IPO valuation also seems fair. You can subscribe for long-term returns. If you are looking for listing gains, consider the risks before applying.
If you need a Demat account to apply for this IPO, you can open it for free with Motial Oswal.
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