Ratnaveer Precision Engineering IPO – In-Depth Analysis and Review

Ratnaveer Precision Engineering Limited is all set to launch its IPO, with the subscription period commencing on September 4, 2023. As a prominent player in the stainless steel manufacturing industry, Ratnaveer Precision Engineering’s IPO has garnered significant attention from investors. In this comprehensive article, we will provide you with a detailed overview of the Ratnaveer IPO, including important dates, key company information, positive and negative factors, and a comprehensive review to help you make an informed investment decision.

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Ratnaveer Precision Engineering IPO Details

IPO Opening Date 04-Sep-23
IPO Closing Date 06-Sep-23
IPO Listing Date 14-Sep-23
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 93 to Rs 98 per equity share
Lot Size 150 Shares
Min Order Quantity 150 Shares
Listing at BSE and NSE
Total Issue Size Rs. 165.03 Crores
    Fresh issue     Rs. 135.24 Crores
    OFS     Rs. 29.79 Crores

Ratnaveer Precision IPO Timetable

IPO Opens on 04-Sep-23
IPO Closes on 06-Sep-23
Basis of Allotment 11-Sep-23
Initiation of Refunds 12-Sep-23
Credit of Shares to Demat 13-Sep-23
Listing Date 14-Sep-23
Cut-off time for UPI mandate confirmation 06-Sep-23

About Ratnaveer Precision Engineering Ltd

Ratnaveer Precision Engineering Limited, established in 2002, specializes in the manufacturing of stainless steel finished sheets, washers, solar roofing hooks, pipes, and tubes. With a diverse customer base spanning industries such as automotive, solar power, power plants, pharmaceuticals, and more, the company has carved out a significant presence in the stainless steel products sector.

The company operates four manufacturing units, with Unit-I and Unit-II located in GIDC, Savli, Vadodara, Gujarat, and dedicated to the production of SS finishing sheets, washers, and solar mounting hooks. Unit-III, situated in Waghodia, Vadodara, handles the steel melting process, transforming steel scrap into ingots, while Unit-IV, in GIDC, Vatva, Ahmedabad, focuses on rolling flat ingots into SS sheets, the raw material for SS washers.

Ratnaveer Precision Engineering is poised to expand its product line by introducing circlips and has secured land for this purpose.

Ratnaveer Precision Engineering Ltd Financials

Here are the financial highlights of the company:

Financial Year ending / Period ending (Amt in Crores)
Particulars FY21 FY22 FY23
Assets 255.9 308.6 389.1
Revenue 364.1 428.5 481.1
Profit After Tax 5.5 9.5 25.0
Profit % 1.50% 2.21% 5.20%
Net Worth 56.6 66.0 106.1
Total Borrowing 150.8 190.7 230.0
Reserves and Surplus 52.3 61.7 71.2

Objects of the Issue

The issue contains OFS where the funds would go to selling share holders and fresh issue. The net proceeds from the fresh issue would be used for the following objectives:

  1. Funding Working Capital Requirements: To ensure adequate liquidity for the company’s day-to-day operations.
  2. General Corporate Purposes: To meet various business needs and explore growth opportunities.

IPO Valuation of Ratnaveer Precision

The IPO price band for Ratnaveer Precision Engineering is set at ₹ 93 to ₹ 98 per share. Here’s how the valuation stacks up:

  • FY23 EPS: With an FY23 EPS of ₹ 7.26, the P/E ratio is approximately 12.8x (98/7.26).
  • Last 3 Years Weighted EPS: Considering the weighted average EPS for the last three years, which is ₹ 4.81, the P/E ratio stands at approximately 20.4x (98/4.81).

Comparing these ratios with industry peers provides valuable context:

  • Industry P/E Average: The industry average P/E ratio is approximately 34.4x.
  • Peer Comparison: Its listed peers like Venus Pipes and Tubes trading at 60x (Highest) and MM Forgings trading at P/E 20x, hence company IPO price at 13x to 20x appears to be attractively priced.

Ratnaveer Precision Engineering IPO – Positive Factors

  • Diverse Customer Base: The company serves a wide range of industries, reducing dependence on any single sector.
  • Strong Revenue Growth: Ratnaveer Precision Engineering has demonstrated consistent revenue growth, indicating its strong market position.
  • Commitment to Innovation: The company’s expansion efforts, including the introduction of circlips, signify its forward-looking approach.

Ratnaveer Precision Engineering IPO – Risk Factors

  • Raw Material Procurement: Lack of long-term agreements with suppliers for raw materials could impact production.
  • Steel Price Volatility: The company is sensitive to fluctuations in steel prices, which could affect profitability.
  • Regional Market Dependency: A significant portion of domestic sales comes from specific regions, which could pose risks if adverse developments occur.
  • Working Capital Intensity: The company’s high-volume, low-margin business model makes it vulnerable to cash flow challenges.
  • Competitive Landscape: The industry has low barriers to entry, and competition from new entrants could affect market share.
  • Related Party Transactions: Past and potential related party transactions could raise concerns about conflicts of interest.

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Ratnaveer Precision Engineering IPO Review – Should you Apply or not?

The Ratnaveer Precision Engineering IPO presents both opportunities and challenges. Consider these key points before making an investment decision:

Pros:

  • Diverse customer base.
  • Steady revenue growth.
  • Expansion efforts.
  • Commitment to innovation.
  • IPO is attractively priced

Cons:

  • Raw material procurement risk.
  • Sensitivity to steel price fluctuations.
  • Regional market dependency.
  • High working capital intensity.
  • Competitive industry landscape.
  • Potential conflicts of interest.

High risk tolerance investors can apply for this IPO.

 

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