Rishabh Instruments IPO Review: Rishabh Instruments Limited is coming up with its Initial Public Offering. The IPO will open for subscription on August 30, 2023, and close on September 1, 2023.

In this article, we will look at Rishabh Instruments IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out! 

Rishabh Instruments IPO Review – About The Company

Rishabh Instruments Limited, incorporated in 1982, is engaged in the manufacture, design, and development of Test and Measuring Instruments and Industrial Control Products with diverse applications across industries including power, automotive and industrial sectors

It is a vertically integrated company that designs, develops, manufactures, and sells metering, control, and protection devices, portable test and measurement instruments, and solar string inverters.

The company, along with its subsidiary Lumel Alucast, produces and distributes high-pressure die casting made of aluminium. Additionally, it offers various manufacturing services such as mould design and production, EMI/EMC testing, electronic manufacturing, and software solutions.

Rishabh Instruments operates 4 segments: (a) electrical automation devices; (b) metering, control, and protection devices; (c) portable test and measuring instruments; and (d) solar string inverters.

It has a large network of 175 approved distributors/stockists spread throughout 81 districts in India, with direct sales performed through eight sales and marketing offices housing 53 engineers and 24 sales employees.

In the last three fiscal years, it has served customers in over 100 countries worldwide. as of May 31, 2023, through five sales and marketing offices and a strong global network of 339 approved distributors/stockists

Rishabh Instruments IPO –Industry Overview

As the company operates in different segments, we’ll go through the market value and the expected growth of each of these segments.

• The global electrical automation market is anticipated to reach $215.1 billion by 2027, from $147.5 billion in 2022.
• The global market for metering, control, and protection devices is projected to be $34.08 billion in 2022 and $43.04 billion by 2027.
• The portable test and measurement equipment market is predicted to increase at a 5.1% annual rate and reach $6.6 billion by 2027. 
• Global sales for solar string inverters is predicted to grow at a 9.1% CAGR from $4.3 billion in 2022 to $6.6 billion in 2027.

Rishabh Instruments IPO Review – Financial Highlights

If we look at the financials of VRishabh Instruments Limited we find out that their assets have increased from ₹511.97 crores in March 2021 to ₹648.93 crores in March 2023. 

Their revenues also follow a similar trend, increasing from ₹402.49 crores in March 2021 to ₹579.78 crores in March 2023. The rise in revenues is accompanied by increasing profits, which have increased from ₹35.94 crores in March 2021 to ₹49.69 crores in March 2023.

Though the revenues and profits of the company have moderately increased, its net profit margins have reduced to 8.57% in FY23.

In terms of return ratios, it has a ROE of 12.39% and a RoCE of 13.77% as of FY23. These are slightly below-average ratios suggesting a moderate return on shareholders’ capital and not an optimal use of company resources.

The debt-to-equity ratio is a positive prospect of the company and was reported at 0.26 for FY23 indicating that the company primarily uses its own funds to run its business.

Financial Metrics 

Competitors of the Company

The company faces competition domestically in India as well as globally across the segments it operates in from companies that either operate in the same line of business or offer similar products. Following are its competitors across various segments:

1. Electrical Automation: Masibus Automation, Instrumentation Private Limited and Selec Controls Private Limited
2. Metering, Control and Protection Devices: Schneider Electric India Private Limited, Elmeasure India Private Limited and Selec Controls Private Limited.
3. Portable test and measuring instruments segment: Hioki India Private Limited and Meco Instruments Private Limited.
4. Solar String Inverter: Shenzhen Growatt New Energy Co. Ltd and KSolare Energy Private Limited.
5. Aluminium High-Pressure Die Casting Offerings: Endurance Technologies Limited and Sunbeam Lightweighting Solutions Private Limited
6.  Electronics Manufacturing Services: Syrma SGS Technology Limited, Amber Enterprises India Limited and Dixon Technologies (India) Limited in India.

Strengths of the Company

• The global presence of the company gives it exposure to the latest technologies for its core segments. This gives them the ability to provide innovative and customizable solutions to its customers more efficiently.
• As the company is a global engineering solution provider operating in large addressable markets, it is well positioned to benefit from mega-industrialisation trends
• The company has geographically distributed manufacturing Facilities making it among the leading global companies in terms of manufacturing and supply of low voltage current transformers. Its vertical integration also makes it a cost and time-efficient supplier of our products to our customers.
• The company has a diverse product portfolio of over 145 product lines and 0.13 million stock-keeping units as of May 31, 2023. It diversifies its products based on the technology, parameters, features and scale for each of the geographies it serves which helps it to retain more customers.
• The company has a diverse customer base and is not dependent on any specific customer for overall revenue from operations.

Weaknesses of the Company

• The company does not have long-term contracts with many of its customers. This can lead to order cancellations, changes in production, delays or in change in sourcing strategy.
• The company is dependent on its subsidiary for a significant portion of operations and revenues. Therefore, it relies on its subsidiaries to expand its market share and business.
• The company sources components and other inputs, including semiconductor chips in some of its manufacturing operations. Shortages in the supply of semiconductors can have adverse effects on the company’s operations
• The company is exposed to foreign exchange rate fluctuations with respect to revenue from overseas business in foreign denominations; its foreign currency-denominated borrowings; currency translation losses for the purpose of preparing our consolidated financial statements; and the value of our foreign assets.
• The demand for the company’s products in foreign countries is subject to international market conditions and regulatory risks that could adversely affect its business and results of operations.

Rishabh Instruments IPO Review – GMP

The shares of Rishabh Instruments traded at a premium of 18.82% in the grey market on August 30, 2023. The shares tarded at Rs 524. This gives it a premium of Rs 83 per share over the cap price of Rs 441. 

Rishabh Instruments IPO Review – Key IPO Information

Promoters: Narendra Joharimal Goliya

Book Running Lead Manager: DAM Capital Advisors Limited, Mirae Asset Capital Markets (India) Private Limited, Motilal Oswal Investment Advisors Limited.

Registrar to the Offer: KFin Technologies Limited

The Objective of the Issue

The net proceeds from this issue will be utilized for the following purposes:

• Financing the cost of Nashik Manufacturing Facility I expansion.
• General corporate purposes

In Closing

In this article, we looked at the details of Rishabh Instruments IPO Review. Through this article, we can conclude that though the company has moderate margins, it is compensated by a diverse product segment and a customer base that can help it drive its revenue.

However, as investors, it is our responsibility to check if the company is able to attain its revenue from different geographies so that it can expand its business efficiently.

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.