In the last few months, Indian IPO investors have made much money. A flurry of Initial Public Offerings (IPOs) is being launched into the markets, with most of them providing double-digit returns. Going with the flow, an IPO of a wire and cable manufacturing company – RR Kabel Limited – is opening for public subscription on 13 September 2023.
As per the record books, the company plans to raise Rs. 1,964 crores from its IPO. Keep reading to know the details of the RR Kabel IPO and subsequently decide whether you should invest in it.
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RR Kabel Limited is one of the leading Indian consumer electrical goods companies. It was incorporated in 1995, with its headquarters in Mumbai, Maharashtra. The company’s products can be divided into two segments – wires and cables, comprising house wires, industrial wires, power cables, and special cables; and Fast-Moving Electrical Goods (FMEG), comprising fans, lights, switches, and small electronic appliances.
These products are sold in the domestic markets under two renowned brands – RR Kabel and Luminous. As of 30 June 2023, it had an exclusive pan-India network with 3,450 distributors, 3,656 dealers, and 1,14,651 authorized retailers. It is currently the fifth-largest player in the Indian branded wires and cables market, with approximately 8% market share. The company has two units at Waghodia and Silvassa and three integrated manufacturing facilities at Roorkee, Bengaluru, and Gagret.
Key Risks or Weaknesses of RR Kabel:
Given below is the table depicting the financials of RR Kabel Ltd. for the last three fiscals. All details are as per the company’s Draft Red Herring Prospectus (DRHP) on the Securities and Exchange Board of India (SEBI) website dated 6th September 2023:
|Particulars||Period Ended June 30, 2023||As of and For FY Ended March 31|
|Revenue From Operations||2724||5599||1236||1597|
|Profit After Tax||74||190||214||135|
|Earnings Per Share (Diluted)||7||17||19||12|
|Net Asset Value (In Rs/share)||135||125||111||93|
|Return on Equity||5%||14%||19%||14%|
|Return on Capital Employed||6%||16%||17%||14%|
*Amount in Crores
As you can see, the company's net worth has remained stable between FY21 and FY23. The revenues have thrived from Rs. 1,236 crores in FY22 to Rs. 5,599 crores in FY23. However, the profits have been erratic, mainly due to the inclusion of the FMEG business. The total borrowings have remained steady between the last three fiscals before shooting up in the current financial year.
The ROE hovers around 15%, and if the company can take it to 20%, it can become an imposing investment proposition. An EPS of Rs. 17 to Rs. 19 is also a good signal for potential investors.
RR Kabel IPO will open for public subscription on Wednesday, 13 September 2023, and closes on Friday, 15 September. It will be a combination of a fresh issue worth Rs. 180 crores and an offer for sale worth Rs. 1,784.01 crores. 50% of the issue has been reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 35% for retail investors.
As a retail investor, you can apply for at least 14 shares (one lot) and in multiples thereof within the price band of Rs. 983 to Rs. 1,035 per equity share. Refer to the table below for more details:
|IPO Date||13 Sep to 15 Sep 2023|
|Face Value||Rs. 5 per share|
|Price Band||Rs. 983 to Rs. 1035 per share|
|Lot Size||14 shares|
|Total Issue Size||18,975,939 shares (aggregating up to Rs. 1,964 crores|
|Fresh Issue||1,739,131 shares (aggregating up to Rs. 180 crores)|
|Offer for sale||17,236,808 shares (aggregating up to Rs. 1,784 crores)|
|Employee Discount||Rs. 98 per share|
|Listing At||NSE, BSE|
The company’s high growth in the last three financial years and impressive EPS make RR Kabel IPO an attractive option for potential investors. However, you should be wary of the risks attached. With Motilal Oswal, you can open a free Demat account and invest in IPOs seamlessly.