Introduction:
The IPO bandwagon refuses to slow down any time soon. After a stellar August, that witnessed the listing of some attractive IPOs like SBFC Finance, Concord Biotech, and Aeroflex Industries, several promising companies have lined up to launch their Initial Public Offerings (IPOs) in September 2023.
First in line is Ratnaveer Precision Engineering Limited. This stainless-steel (SS) products manufacturing company plans to raise around Rs. 165 crores through its IPO, which opens for public bidding on 4 September 2023. Continue reading to learn more about the Ratnaveer Precision Engineering IPO and decide if you should invest in it.
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About Ratnaveer Precision Engineering:
Incorporated in 2002, Ratnaveer Precision Engineering Limited is a leading manufacturer of Stainless Steel (SS) finished sheets, washers, pipes, tubes, and solar roofing hooks. The company’s products have applications across a range of industries, including automotive, renewable energy, oil and gas, pharmaceuticals, sanitation, plumbing, instrumentation, and electromechanics.
The company supplies its products in both domestic and international markets. As of March 2023, it has four manufacturing units in India, with three of them located at GIDC, Savli, and Waghodia in Vadodara, Gujarat, and one at GIDC, Vatva, in Ahmedabad, Gujarat. The company has grown at a Compound Annual Growth Rate (CAGR) of 75% in the last five years.
Strengths of Ratnaveer Precision Engineering:
- A synergistic business model with a strong focus on backward integration
- A robust product portfolio with multiple designs of products
- An established supplier of SS industrial goods in the international market
- All four manufacturing units are strategically located close to each other
- The company is known to have a core focus on quality manufacturing
- Numerous certifications for quality assurance and quality control of products
Risks/weaknesses Of Ratnaveer Precision Engineering:
- A major portion of the revenues comes from a few established clients
- Domestic sales are highly concentrated within the west and north zone
- Operates in a highly competitive and fragmented industry with low entry barriers
- Business is highly subjected to market demand, volatility, and economic conditions
- An absence of long-term agreements with suppliers may disrupt business operations
Financial Snapshot Of Ratnaveer Precision Engineering:
The financials of Ratnaveer Precision Engineering Ltd. for the last three financial years are as follows. All details are as per the company’s Draft Red Herring Prospectus (DRHP) on the Securities and Exchange Board of India (SEBI) website dated 22 August 2023:
*Amount in Crores
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Below are a few takeaways from the financials of Ratnaveer Precision Engineering Company as seen in the table above:
- The revenues have grown at a very steady rate from Rs. 360 crores in FY 2021 to Rs. 480 crores in FY 2023
- Profit after tax has gone up by five times from Rs. 5 crores in FY 2021 to Rs. 25 crores in FY 2023
- The total borrowings of the company have also increased from Rs. 151 crores to Rs. 230 crores in the same period
- As of 31 March 2023, the return on equity (ROE) stood at a highly impressive 29%
Details of the IPO:
The Ratnaveer Precision Engineering IPO is estimated to be worth Rs. 165.03 crores with a fresh issue of up to Rs. 135.24 crores and an offer for sale of up to Rs. 29.79 crores. The IPO will open for public bidding on 4 September and closes on 6 September 2023. From the IPO proceeds, the company plans to:
- Meet its working capital requirements
- Undertake general corporate activities
As a retail investor, you can apply for at least 150 equity shares (one lot) and in multiples thereof in the price band of Rs. 93 to Rs. 98 per share. 50% of the IPO has been reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Buyers (NIBs), and the remaining 35% for retail investors.
The table below summarises the IPO details:
The final word
Considering the robust growth of the company in the last few years and a wide product range, Ratnaveer Precision Engineering may be a good company to invest in. Despite being a capital-intensive business, it has also maintained an impressive ROE, and the IPO valuation is fair. However, you may want to conduct your own research or contact a financial advisor before investing. If you need a Demat account to invest in this IPO, you can now open it for free with Motilal Oswal.
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