RR Kabel Limited is gearing up to launch its IPO, with the subscription period set to kick off on September 13, 2023. As a prominent player in the consumer electrical products industry, RR Kabel’s IPO has garnered significant attention from investors. In this in-depth article, we will provide you with a detailed overview of the RR Kabel IPO, including important dates, key company information, positive and negative factors, and a comprehensive review to assist you in making a well-informed investment decision.
RR Kabel IPO Dates, Lot Size and Details
| IPO Opening Date | 13-Sep-23 |
| IPO Closing Date | 15-Sep-23 |
| IPO Listing Date | 26-Sep-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 5 per equity share |
| IPO Price band | Rs 983 to Rs 1035 per equity share |
| Lot Size | 14 Shares |
| Min Order Quantity | 14 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 1964.01 Crores |
| Fresh issue | Rs. 180 Crores |
| OFS | Rs. 1784.01 Crores |
| Employee Discount | Rs.98 Per Share |
RR Kabel Limited IPO Timetable
| IPO Opens on | 13-Sep-23 |
| IPO Closes on | 15-Sep-23 |
| Basis of Allotment | 21-Sep-23 |
| Initiation of Refunds | 22-Sep-23 |
| Credit of Shares to Demat | 25-Sep-23 |
| Listing Date | 26-Sep-23 |
| Cut-off time for UPI mandate confirmation | 15-Sep-23 |
About RR Kabel Limited
Established in 1995, RR Kabel Limited specializes in the manufacturing of consumer electrical products for residential, commercial, industrial, and infrastructure applications. The company operates in two primary segments:
Wires and Cables: This segment includes house wires, industrial wires, power cables, and special cables, catering to diverse electrical infrastructure needs.
FMEG (Fans, Lighting, Switches, and Appliances): Under the ‘Luminous Fans and Lights’ brand, RR Kabel manufactures and sells fans, lighting solutions, switches, and appliances.
In 2020, RR Kabel made a significant move by acquiring Arraystorm Lighting Private Limited, expanding its product portfolio to include LED lights and related hardware for office, industrial, and warehouse spaces. Additionally, in 2022, the company acquired the home electrical business (HEB) of Luminous Power Technologies Private Limited, further strengthening its FMEG portfolio.
RR Kabel operates manufacturing units in Waghodia, Gujarat, and Silvassa, Dadra and Nagar Haveli, and Daman and Diu for wire and cable production. It also owns integrated manufacturing facilities in Roorkee, Uttarakhand; Bengaluru, Karnataka; and Gagret, Himachal Pradesh, catering to FMEG product manufacturing.
The company’s clientele spans domestic and international markets, with 71% of its revenue from operations in the last three months ending June 30, 2023, coming from the wires and cables segment, and 97% from the FMEG segment through the B2C channel.
RR Kabel Limited Financials
Here are the key financials of RR Kabel Limited.
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Particulars | FY20 | FY21 | FY22 | FY23 |
|---|---|---|---|---|
| Assets | 1,545.36 | 1,715.11 | 2,050.64 | 2,633.62 |
| Revenue | 2,505.54 | 2,745.94 | 4,432.22 | 5,633.64 |
| Profit After Tax | 122.40 | 135.40 | 213.94 | 189.87 |
| Net Worth | 875.07 | 1,033.38 | 1,237.05 | 1,390.47 |
| Reserves and Surplus | 459.23 | 594.93 | 781.31 | 914.15 |
| Total Borrowing | 395.29 | 498.71 | 521.11 | 515.84 |
Objects of the RR Kabel Limited IPO
- The objects of the IPO has both OFS and fresh issue. Under OFS, the sellign share holders would sell the shares and company would not benefit from this.
- Under fresh issue, the company intends to utilize the net proceeds from the issue towards the funding of the following objects:
- Repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions.
- General corporate purposes.
IPO Valuation of R R Kabel Limited
The RR kabel IPO price IPO band is set at Rs. 983 to Rs. 1,035 per share.
- If we consider last year FY23 EPS of Rs 17.07, P/E ratio works out to be 61x
- If we consider last 3 years weighted EPS of Rs 16.97, P/E ratio works out to be 61x
- The listed peers like Havells India trading at P/E 79x (Highest) and Finolex Cables is trading at P/E of 33x (Lowest) and industry average P/E is 58x. Hence, the IPO Price band at P/E of 61x is Overpriced.
RR Label IPO Grey Market Premium (GMP)
While there is no authentic source to verify on R R Kabel IPO GMP, as of today, there are some sources on Chittorgarh IPO website indicate GMP between 310 to 320.
Positive Factors of investing in RR Kabel IPO
- Diverse Product Portfolio: RR Kabel Limited boasts a wide-ranging product portfolio, catering to residential, commercial, industrial, and infrastructure needs. This diversity can provide stability in different market conditions.
- Strategic Acquisitions: The company’s strategic acquisitions, including Arraystorm Lighting Private Limited and the home electrical business of Luminous Power Technologies Private Limited, have expanded its product offerings and market presence.
- Manufacturing Capabilities: With manufacturing units across various locations in India, RR Kabel has a robust production infrastructure, ensuring efficient operations and product delivery.
- Clientele Diversity: RR Kabel serves a diverse clientele, both domestically and internationally, reducing dependency on any single market or customer segment.
- Revenue Growth: The consistent revenue growth in recent years reflects the company’s strong market position and demand for its products.
- Innovation and Expansion: The company’s commitment to innovation, as evidenced by the introduction of circlips, and plans for expansion highlight its forward-looking approach to business.
Risk Factors of investing in RR Kabel IPO
- Low margins in FY23: While company earned good growth in revenues in FY23, but it sufferred pressure on margins in FY23.
- Raw Material Price Volatility: Fluctuations in raw material prices, a common challenge in manufacturing, can impact the company’s profitability.
- Supply Chain Disruptions: Any disruptions or delays in the supply chain for raw materials could affect production and operations.
- Manufacturing Facility Risks: Breakdowns or shutdowns in manufacturing facilities can have adverse effects on the company’s business and financial stability.
- Market Valuation: The IPO’s price band at a high P/E ratio could be perceived as overpriced compared to industry peers, which may discourage some investors.
- Dependency on Distributors: RR Kabel’s ability to maintain a stable distribution network and attract additional distributors, dealers, and retailers is crucial for business growth.
- Overseas Market Dependency: Heavy reliance on a few distributors in overseas markets carries risks, especially if there are significant changes in business arrangements with these distributors.
- Related Party Transactions: Past and potential related party transactions could raise concerns about conflicts of interest and corporate governance.
Should you invest in RR Kabel IPO?
The R R Kabel Limited IPO presents a mixed investment opportunity.
- While the company offers a diverse product portfolio, consistent revenue growth, and expansion plans, it also faces challenges such as raw material price volatility and supply chain risks.
- The IPO’s relatively high valuation compared to peers may discourage investors for investing.
- Investors with a high risk tolerance and a long-term perspective may consider this IPO due to growth potential.
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Sir,
Are you planning IPO for myinvestmentideas.com?
No Suresh Kumar. We generate small advt revenue and do not have any major source of income. I analyse and post my analysis out of my interest.