The initial public offering (IPO) of integrated marketing services provider RK Swamy opens for subscription today (March 4). The three-day bidding process ends on March 6th. Ahead of the IPO launch, the company's shares were trading at a premium of ₹90 in the gray market today.
Should you apply or not?
Most analysts have given the IPO a “Subscribe for the Long Term” rating given the company's strong track record of 15 years in data analytics and marketing technology, well-diversified customer base and strong management.
Reliance Securities: Subscribe long term
RK Swamy's long-standing customer relationships with government companies and agencies to create awareness about the company's policies, promote various new initiatives, health and education programs and country-related marketing services are the key positive aspects, analysts at Reliance Securities said in its IPO note.
The company's strong management helps attract domestic and global customers across various industry segments as private companies spend around 3% of their revenue on product promotion, which will lead to sustainable growth in the coming years.
“We believe that improving margins, newer cities and innovative campaigns in the digital medium will help improve the overall customer experience and build brands that drive success for customers. We therefore recommend subscribing to the topic long-term,” it said.
Anand Rathi: Subscribe long term
According to brokerage firm Anand Rathi, the organization is considered the leading integrated marketing services group in India and offers a comprehensive solution that includes creative, media, data analytics and market research services under one roof. Over the past five decades, they have achieved organic growth by deftly responding to market trends and changing customer needs, it said.
The company also has a 15-year track record in data analytics and marketing technology. They have a proven ability to generate digital content at scale and are establishing themselves as leaders in market research.
“At the upper price band, the company is valued at a P/E (Price to Earnings) ratio of 46.5 on its FY23 earnings, with a market capitalization of ₹1,453 crore post-issue of shares and a net return of 22.2%,” the analysts said, adding: “We believe the company's valuations are appropriate and recommend a 'Subscribe-Long Term' rating for the IPO.”
RK Swamy IPO price range
The company has set a price range of ₹270 to ₹288 per share for its ₹423 crore IPO. Investors can place bids for 50 shares in one lot and multiples thereafter.
At the upper price band, the total issue size is ₹423 Crore and the total market capitalization of the company is pegged at ₹1,450 Crore.
RK Swamy IPO size
The IPO will be a mix of new shares worth ₹173 crore and an offer for sale (OFS) of 87 lakh shares by promoters and investors.
Promoters Srinivasan K Swamy and Narasimhan Krishnaswamy will offload 17.88 lakh shares each in the OFS, while investors Evanston Pioneer Fund LP will offload 44.45 lakh shares and Prem Marketing Ventures LLP will offload 6.78 lakh shares through the OFS.
The promoters own 84.44% stake in RK Swamy and the remaining 15.56% stake is held by selling public shareholders Evanston Pioneer Fund LP and Prem Marketing Ventures LLP. Prem Marketing Ventures LLP will exit the marketing services provider after the issue.
IPO target of RK Swamy
RK Swamy will spend ₹54 crore of the net proceeds from the fresh issue for working capital requirements. In fact, the fund size required for working capital has been reduced to ₹ 54 crore from the previous ₹ 87 crore.
Additionally, ₹10.98 crore will be used for setting up a DVCP studio, ₹33.34 crore will be used for investment in IT infrastructure development and ₹21.74 crore will be used for setting up a new CEC and CATI of the company.
RK Swamy IPO Structure
About 75% of the net offering is reserved for qualified institutional investors (QIBs), while non-institutional investors (NIIs) receive 15% of the shares. Private investors receive 10% of the net offer. The company has reserved shares worth ₹7.50 crore for eligible employees of the company who will get a discount of ₹27 per share during the bidding process.
Company overview
RK Swamy Ltd is the largest Indian-majority integrated marketing services provider in India, offering a single-window solution for creative, media, data analytics and market research services.
In FY2023, one of India's pioneering advertising agencies, RK Swamy, released over 818 creative campaigns on behalf of clients across media, processed over 97.69 terabytes of data and conducted over 2.37 million consumer interviews across quantitative, qualitative and telephone surveys .
Finance
RK Swamy reported net profit of ₹7.93 crore and revenue of ₹142.55 crore for the period ended September 30, 2023. The company posted a net profit of ₹31.26 crore and revenue of ₹299.91 crore for the fiscal year ended March 31, 2023.
RK Swamy IPO BRLM
SBI Capital Markets, IIFL Securities and Motilal Oswal Investment Advisory are the merchant banks of the IPO while Kfin Technologies is the registrar.
RK Swamy IPO allotment, listing
The shares will be allocated on March 7th and the shares will be credited to the custody accounts on March 11th. The stock will be listed on both BSE and NSE on March 12.
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