R R Kabel IPO Review: R R Kabel Limited is coming up with its Initial Public Offering. The IPO will open for subscription on September 13, 2023, and close on September 15, 2023.
In this article, we will look at R R Kabel IPO Review 2023 and analyze its strengths, weaknesses, financials and GMP. Keep reading to find out!
Table of Contents
R R Kabel IPO Review – About The Company
Founded close to two decades ago, RR Kabel is one of the leading wires, cables and fast-moving electrical goods (FMEG) manufacturing companies in India. It stands as the fifth-largest producer of wires and cables in the country, commanding a 5% market share.
RR Kabel operates two integrated production facilities for wires and cables located in Gujarat and Daman & Diu. Furthermore, it runs three integrated production units for FMEG products across Uttarakhand, Karnataka and Himachal Pradesh.
Its manufacturing facilities are supported by a strong distribution network of 106,626 retail outlets. Its 35 international product certifications help it to maintain trust with its distributors and customers.
Talking about its product portfolio, it manufactures a wide range of house wires, industrial wires, power cables, special cables, fans, lighting, switches, and appliances. RR Kabel earns 71% of its income from the sales of wires and cables while the balance 29% comes from FMEG products. The majority of its FMEG sales are B2C in nature.
The following images depict the product portfolio of the company:
R R Kabel IPO – Industry Overview
India is a significant player in the global electricity market, ranking third in production and second in consumption. The consumer electrical industry is a crucial component of the Indian economy, making up around 8% of the country’s manufacturing output, approximately 1.5% of its GDP, and about 1.5% of its exports.
In Fiscal 2023, the estimated value of the consumer electrical industry, which encompasses fast-moving electrical goods, wires, and cables, was around ₹1,811,500 million. It is predicted to experience a compound annual growth rate of about 10% until Fiscal 2027, which is a market worth of roughly ₹2,665,000 million.
R R Kabel IPO Review – Financials
If we look at the financials of R R Kabel IPO we find out that their assets have increased from ₹1,715.11 crores in March 2021 to ₹2,633.62 crores in March 2023.
Their revenues follow a similar trend, doubling from ₹2,745.94 crores in March 2021 to ₹5,633.64 crores in March 2023. The rise in revenues is accompanied by a moderate increase in profits, which have increased from ₹135.40 crores in March 2021 to ₹189.87 crores in March 2023.
Based on its return ratios, the company’s ROE of 13.59% and RoCE of 15.57% as of FY23 indicate a moderate return on shareholders’ capital and an average level of efficiency in resource utilization.
The debt-to-equity ratio of the company stands at 0.36 which means the company has comparatively lower debt than its equity. It also means that the company is majorly using its own funds to run its business.
Financial Metrics
Peers of the Company
The following image will show you the peers of the company along with their important metrics:
Strengths of the Company
- The company produces and sells a wide range of products in various categories, enabling cross-selling opportunities. It invests in global trends and has the capacity to meet the rising demand for items like 5G telecom cables, EV charging cables, smart fans, and designer lights.
- The company has a pan-India distribution network and also a global distribution network that helps it maximise its customer reach.
- The company is the fastest-growing consumer electrical company amongst its peers in India, growing at a CAGR of 43.4% between FY21 to FY23. It also puts in additional efforts towards marketing and sales across multiple touch points where customers discover its brands and product offerings
- The company owns and operates five integrated manufacturing facilities that are accredited to Indian and international standards, and capable of precision manufacturing its wide range of products.
- The company is confident in its ability to secure a substantial portion of the FMEG market growth due to its omnichannel presence, both physical and digital sales, a wide-ranging product portfolio at different price points, and its skill in identifying segment product gaps.
Weaknesses of the Company
- The company has significant power and fuel requirements and any disruption to power sources could increase its production costs and adversely affect its results of operations and cash flows.
- It is exposed to foreign currency fluctuation risks, particularly in relation to the import of raw materials, export of products and borrowings. This may adversely affect the company’s results of operations, financial condition and cash flows.
- The availability of counterfeit products and trademark infringement could hurt the company’s business and competitive position.
- The company may not secure favourable distribution agreements with national or overseas distributors. Termination of relationships with key overseas distributors could significantly harm its business, finances, and overall performance.
- The company relies on bank-provided channel financing to enhance cash flow and provides guarantees for a portion of its customers’ debt to these banks. Any failure by customers to repay these debts could result in financial losses and adversely affect profitability.
R R Kabel IPO Review – GMP
The shares of R R Kabel traded at a premium of 38.78% in the grey market on September 8, 2023. The shares tarded at Rs.1325. This gives it a premium of Rs 290 per share over the cap price of Rs 1035.
R R Kabel IPO Review – Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | ₹1,964.01 Cr |
| Fresh Issue | ₹180.00 Cr |
| Offer for Sale (OFS) | ₹1,784.01 Cr |
| Opening date | September 13, 2023 |
| Closing date | September 15, 2023 |
| Face Value | ₹5 per share |
| Price Band | ₹983 to ₹1035 per share |
| Lot Size | 14 Shares |
| Minimum Lot Size | 1(14 shares) |
| Maximum Lot Size | 13(182 shares) |
| Listing Date | September 26, 2023 |
Promoters: Tribhuvanprasad Rameshwarlal Kabra, Shreegopal Rameshwarlal Kabra, Mahendrakumar Rameshwarlal Kabra, Kirtidevi Shreegopal Kabra, Tribhuvanprasad Kabra HUF, Kabra Shreegopal Rameshwarlal HUF and Mahendra Kumar Kabra HUF
Book Running Lead Manager: Axis Capital Limited, Citigroup Global Markets India Private Limited, HSBC Securities and Capital Markets (India) Private Limited and JM Financial Limited.
Registrar to the Offer: Link Intime India Private Limited
The Objective of the Issue
The net proceeds from this issue will be utilized for the following purposes:
- Complete or Partial, repayment or prepayment of borrowings availed by the company from banks and financial institutions.
- General corporate purposes.
In Closing
In this article, we looked at the details of R R Kabel IPO Review 2023. We have to note that the company operates in a low-profit margin industry but at the same time, it has a good market position when comparing itself to the listed players in the market. Thus if the company manages to increase its sales volumes it has a good potential for the future.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Aaron Vas
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment decisions.
