RR Kabel IPO has reserved not more than 50% of the shares of the public issue for Qualified Institutional Buyers (QIB), not less than 15% for Non Institutional Investors (NII) and not less than 35% of the offering is reserved for qualified institutional buyers and retail investors .
The company held back when it came to RR Kabel’s IPO ₹10.8 Crore worth of shares for its employees. It offers shares to employees at a discount of ₹98 per share at the final offer price.
RR Kabel is one of the top companies in Fast Moving Electrical Goods (FMEG) and wires and cables of the consumer electrical industry with a history of more than 20 years in the country.
According to RHP, the company’s listed industry peers are Havells India Ltd, Polycab India Ltd, KEI Industries Ltd, Finolex Cables Ltd, V-Guard Industries Ltd, Crompton Greaves Consumer Electricals Ltd and Bajaj Electricals Ltd.
“We are the fastest growing consumer electronics company among our peers in India, growing at a compound annual growth rate (CAGR) of 43.4% between FY2021 and FY2023,” the company said in its RHP.
The minimum price for RR Kabel’s IPO is 196.60 times and the maximum price is 207.00 times the par value of the shares.
Shreegopal Kabra, Managing Director of RR Kabel and Group President of RR Global said in an interview with CNBC-TV18 today, “ ₹136 crore of the total ₹The 180 Crore collected will be used to reduce debt. Can do ₹7,000 crore revenue from existing capacity. Can reach a breakeven point on FMEG sales ₹1,200 Crore.”
RR Kabel’s IPO has been subscribed at 12% on the first day so far. The private investor share of the RR Kabel IPO was subscribed to 19%, the NII share to 10% and the employee share to 34%.
Also Read: RR Kabel IPO sees subdued demand on day one and has subscribed 12% so far
RR Cable IPO details
At the upper end of the price range, RR Kabel IPO is aiming for an increase ₹1,964.01 crore from the IPO. The IPO involves the new issue of shares worth ₹180 crore and an offer for sale (OFS) worth 1.72 crore shares ₹1,784 crore from the promoters and investors. In the OFS, TPG Asia VII SF Pte Ltd will offload 1.29 crore shares while public shareholder Ram Ratna Wires will sell its entire shareholding of 13.64 lakh shares.
Other selling shareholders in OFS include promoters Mahendrakumar Kabra, Hemant Kabra, Sumeet Kabra and Kabel Buildcon Solutions, part of the promoter group.
The company plans to use the proceeds of the issue primarily to repay debt of ₹136 crore and for general corporate purposes.
Evaluating RR Cable’s IPO
brokerage companies, Canara Bank Securities Ltd, stated that RR Kabel is the fifth largest player in the Indian wire and cable business. After acquiring Luminous Home Electrical, the company plans to add premium and mid-premium fans and lights in 2022. With a 40% market share in this area, wires and cables account for the majority of the company’s sales.
“In wires and cables, the company recorded 63% revenue growth on 23% volume growth in FY2022 and 21% growth on 20% volume growth in FY2023. However, the margin was impacted due to raw material prices. Based on FY2023 EPS, the company appears to be fairly priced, we recommend a long-term subscription,” the brokerage house said.
Trust Securities Ltd In its report, the company reported an average EPS of Rs. 16.97 (fully diluted) for the FY23 financials and an average RoNV of 14.78% during the last three financial years. The structural growth factors for the consumer electronics industry remain very strong. RR Kabel has a wide product range, has scaled the B2C business in W&C and expanded the FMEG segment using its wide international and domestic network while establishing a strong consumer brand.
“We believe the premiumization path could potentially lead to structural margin expansion and B2C sales are likely to remain strong in the coming years. The recent correction in input prices and sharp rise in several demand drivers augur well for the company. We recommend a subscription to the issue,” the brokerage firm added.
Hensex Securities Pvt Ltd Brokerage also has a “Subscribe” rating for the issue. The brokerage firm in its report advised investors to apply for both listing gains and long-term investments.
“With a scaled B2C business in the wire and cable industry, an extensive national and global distribution network, a diverse product range and strong financials. “We recommend subscribing to the issue, both from a stock market gains perspective and from a long-term investment perspective,” the brokerage firm said in its report.
However, Choice Equity Broking Pvt Ltd advises investors to be careful when making subscriptions.
“With solid brand recognition, diversified product profile, operational scale, certified production facilities and broad and largest distribution network, RKL is well positioned to benefit from growth in the domestic consumer electricity market. Profitability margins and return ratios are likely to improve in the future, mainly in anticipation of lower commodity prices and improved business dynamics.
At a higher price level, RKL requires a TTM P/E multiple of 47.4x (to its TTM earnings per share of ₹21.8), which corresponds to a discount from the comparison average. However, given the subdued profitability (particularly for B2C-oriented players) and return ratios, the issue appears to be fully priced in. Therefore, we assign a “Subscribe with Caution” rating to the issue,” the broker said.
RR Cable IPO Allotment Date and RR Cable Listing Date
The basis for allotment of the shares of RR Kabel’s IPO will be decided on Thursday, September 21st and the company will initiate redemption on Friday, September 22nd while the shares will be issued on Monday, September 25th Demat account of the allottees will be credited. Shares in the IPO of RR Kabel are expected to list on the BSE and NSE on Tuesday, September 26.
RR Cable IPO GMP today
RR Cable IPO GMP today or gray market premium is +150, similar to the previous trading session. This suggests that RR Kabel’s IPO price was trading at a premium of ₹150 on the gray market on Wednesday, according to topsharebrokers.com
Taking into account the upper end of the IPO price range and the current gray market premium, the estimated listing price of RR Kabel’s IPO stock is ₹1,185 per piece which is 14.49% higher than the IPO price of ₹1,035.
“Gray market premium” indicates investors’ willingness to pay more than the issue price.
Also Read: RR Kabel IPO starts tomorrow: Latest GMP, price range, dates and other important details you should know
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Updated: September 13, 2023, 09:29 AM IST
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