Rolex Rings’ Rs 731 cr IPO opens. Should you subscribe?
The company and shareholders plan to raise Rs 731 crore from primary markets. The offer comprises fresh issue of Rs 56 crore and offer for sale of 75 lakh shares. Investors can bid in a multiple of 16 shares and multiples thereof. The issue is pri...
By Shubham Raj, ETMarkets.com |
iStock
NEW DELHI: The initial public offer of Rolex Rings, an automotive component company, will open for subscription on Wednesday, which most analysts believe is worth applying for but one to exercise some caution.
The company and shareholders plan to raise Rs 731 crore from primary markets. The offer comprises fresh issue of Rs 56 crore and offer for sale of 75 lakh shares. Investors can bid in a multiple of 16 shares and multiples thereof. The issue is priced in the range of Rs 880-900.
Considering the FY21 adjusted EPS of Rs 31.93 on post issue basis, the company is going to list at a PE of 28.19 with a market-cap of Rs 2,451 crore, while its peers namely Ramkrishna Forgings and MM Forgings are trading at a P/E of 123.30 and 37.14, respectively.
“The company is one of the leading forging manufacturers with a geographically diversified revenue base and is available at reasonable valuation as compared to its peers. However, the client concentration risk and CDR debt restructuring in the past keeps us cautious at the same time from a longer-term perspective,” said Saurabh Joshi of Marwadi Shares and Brokers.
He has a ‘subscribe with caution’ rating on the issue.
The company manufactures hotrolled forged and machine bearing rings and automotive components that are used across vehicle segments and other segments namely industrial machinery, wind turbines and railways.
Currently, the company has 3 manufacturing units in Rajkot with an annual achievable capacity of 144,750 MTPA in forging and 69 million parts per annum in machining. It counts SKF India, Schaeffler India and Timken India among its customers.
From the share sale, the company will only get Rs 56 crore, which will be used for funding long-term working capital requirements and general corporate purposes, the company said.
Analysts said even as the revenues for most listed peers and the company have declined over the past four years, Rolex has generated better ROEs on account of better asset turnover.
Milan Desai, Lead Equity Analyst, Angel Broking, said the issue is priced reasonably given its strong return ratios. “Considering potential rebound in demand from user industries, we have a positive outlook on the Rolex Rings IPO,” he said.
Bidding for the issue will close on Friday.
The company and shareholders plan to raise Rs 731 crore from primary markets. The offer comprises fresh issue of Rs 56 crore and offer for sale of 75 lakh shares. Investors can bid in a multiple of 16 shares and multiples thereof. The issue is priced in the range of Rs 880-900.
Considering the FY21 adjusted EPS of Rs 31.93 on post issue basis, the company is going to list at a PE of 28.19 with a market-cap of Rs 2,451 crore, while its peers namely Ramkrishna Forgings and MM Forgings are trading at a P/E of 123.30 and 37.14, respectively.
“The company is one of the leading forging manufacturers with a geographically diversified revenue base and is available at reasonable valuation as compared to its peers. However, the client concentration risk and CDR debt restructuring in the past keeps us cautious at the same time from a longer-term perspective,” said Saurabh Joshi of Marwadi Shares and Brokers.
He has a ‘subscribe with caution’ rating on the issue.
The company manufactures hotrolled forged and machine bearing rings and automotive components that are used across vehicle segments and other segments namely industrial machinery, wind turbines and railways.
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Currently, the company has 3 manufacturing units in Rajkot with an annual achievable capacity of 144,750 MTPA in forging and 69 million parts per annum in machining. It counts SKF India, Schaeffler India and Timken India among its customers.
From the share sale, the company will only get Rs 56 crore, which will be used for funding long-term working capital requirements and general corporate purposes, the company said.
Analysts said even as the revenues for most listed peers and the company have declined over the past four years, Rolex has generated better ROEs on account of better asset turnover.
Milan Desai, Lead Equity Analyst, Angel Broking, said the issue is priced reasonably given its strong return ratios. “Considering potential rebound in demand from user industries, we have a positive outlook on the Rolex Rings IPO,” he said.
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Bidding for the issue will close on Friday.
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