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14 October 2023

R R Kabel IPO: Connecting to a Wired Future

Introduction:

R R Kabel Limited, established in 1995, is a prominent player in the consumer electrical products industry. The company offers a wide range of products for residential, commercial, industrial, and infrastructure purposes, including wires, cables, power cables, special cables, fans, lighting, switches, and appliances.

IPO Overview:

R R Kabel's IPO raised a total of Rs 1,964.01 crores. This offering comprised a fresh issue of 0.17 crore shares worth Rs 180.00 crores and an offer for sale of 1.72 crore shares worth Rs 1,784.01 crores. The IPO subscription window was open from September 13, 2023, to September 15, 2023, with the allotment finalized on September 21, 2023. The shares were listed on both BSE and NSE on September 20, 2023. The IPO was priced in the range of ₹983 to ₹1035 per share, with a minimum lot size of 14 shares and a minimum investment requirement of ₹14,490 for retail investors.

Key Players:

The book running lead managers for the R R Kabel IPO were Axis Capital Limited, Citigroup Global Markets India Private Limited, Hsbc Securities & Capital Markets Pvt Ltd, and Jm Financial Limited. Link Intime India Private Ltd served as the registrar for the issue.

Stock Performance:

As of October 6, 2023, R R Kabel Limited's stock was trading at ₹1,502.80, representing a 1.27% increase. The stock opened at ₹1,484.95, reached a high of ₹1,523.70, and touched a low of ₹1,480.60. The previous closing price was ₹1,483.95, with a total traded value of 9,22,131 shares. The 52-week high and low were ₹1,232.00 and ₹1,136.80, respectively.

Ownership Structure:

Pre-issue shareholding stood at 66.42%, and post-issue, it is 62.77%.

Financial Performance:

As of March 31, 2023, R R Kabel's financials demonstrated its robust growth. The company's assets totaled ₹2,633.62 crores, with revenue of ₹5,633.64 crores. Profit after tax was ₹189.87 crores, and the net worth reached ₹1,390.47 crores, with reserves and surplus of ₹914.15 crores. The total borrowing as of that date was ₹515.84 crores.

Performance Indicators:

Key performance indicators included a Post P/E (Price-to-Earnings) ratio of 39.26 and a Market Capitalization of ₹11,675.63 crores.

Objectives of the Issue:

The net proceeds from the IPO were allocated for the following purposes:

1. Repayment or prepayment of borrowings availed by the company from banks and financial institutions.
2. General corporate purposes.

Expert Opinion:

Suggested that investors consider this IPO for medium to long-term rewards, as R R Kabel is one of the leading manufacturers in the Indian consumer electrical goods sector, known for its quality products. While the company exhibited steady growth in its top line, it faced margin pressure in FY23. Based on annualized FY24 earnings, the issue appeared fully priced.

Subscription Status:

The R R Kabel IPO attracted significant interest from investors, with a subscription rate of 18.69 times as of September 15, 2023. Retail investors displayed moderate interest with a subscription rate of 2.13 times. Non-Institutional Investors (NII) actively participated, with a subscription rate of 13.23 times, including 15.68 times for bids above ₹10 lakhs (bNII) and 8.33 times for bids below ₹10 lakhs (sNII).

Conclusion:

R R Kabel Limited's diverse portfolio of consumer electrical products positions it as a promising player in the industry. However, investors should conduct thorough due diligence, considering the company's financials and market conditions, before participating in this IPO. As always, align your investment decisions with your financial goals and risk tolerance.

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