RR Kabel IPO opens; GMP rises 21% should you subscribe to the issue-

RR Kabel IPO opens; GMP rises 21% should you subscribe to the issue?

RR Kabel IPO: RR Kabel IPO opens for public subscription on Wednesday, September 13, and will close on Friday, September 15, 2023. The price band for its public issue at Rs 983-1035 per equity share of face value Rs 5 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 1,964.01 crore from the IPO. Ahead of the public issue, RR Kabel shares’ GMP rose to Rs 220 per equity share. The bidding for anchor investors concluded on Tuesday, wherein the company collected Rs 585.62 crore.

The IPO comprises a fresh issue of 1,739,131 shares, aggregating up to Rs 180 crore and an Offer-For-Sale (OFS) with promoters offloading17,236,808 shares worth Rs 1,784.01 crore. The company intends to use the net proceeds from the IPO to repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions and for the general corporate purposes. For potential investors, the bidding starts at a minimum of 14 equity shares, with subsequent bids in multiple lots of 14 equity shares each.

Should you apply for the RR Kable IPO?Motilal Oswal Financial Services: Subscribe

“We like RRKL given its strong positioning in C&W industry with good brand recall and extensive distribution network. The issue is valued at 39x annualized Q1FY24 P/E which is in line with peers. We believe RRKL could benefit from the industry tailwinds given its size and higher presence in B2C segment. Hence, we recommend Subscribe.”

LKP Securities: Subscribe

“The company has reported an average EPS of Rs. 16.97 (fully diluted) and an average RoNW of 14.78% for the last three fiscals. It has posted PAT margins of 4.93% (FY21), 4.83% (FY22), 3.337% (FY23), and 4.61% (Q1-FY24), and RoCE of 13.59%, 17.41%, 15.57% and 5.95% for the corresponding periods, respectively. On the dividend policy front, the company has declared dividends of 100% (FY22), 180% (FY23) and 90% (FY24) so far. It will continue to follow a prudent dividend policy based on its financial performance and future prospects. While we had hoped that RR KABEL would have kept the pricing of their comparable peers at the time of their Initial Public Offers in mind while pricing their issue, hopes need not necessarily become a reality, yet we recommend investors to SUBSCRIBE to the IPO.”

InCred Equities : Subscribe

“At the upper price band of Rs1,035, the implied P/E is 32x FY25F EPS vs. Polycab/KEI at 43x/32x, respectively, based on our estimates. We like the longevity in the business, size and scale, B2C mix, scope to improve margins and healthy cash flow growth going ahead. We expect revenue/EBITDA/PAT CAGR of 16%/33%/36%, respectively, over FY23-26F. We recommend subscribing to the IPO, given C&W industry demand tailwinds and a healthy OCF growth over FY23-26F. Downside risks: Volatile input costs & continuous losses in the FMEG segment.”

Equirus Securities: Subscribe

“India’s W&C industry continues to benefit from strong tailwinds such as govt.’s infra thrust, rural electrification, higher per capita consumption of electricity, growth in commercial and residential sectors, 5G rollout, digitization initiatives, and China+1 strategy. With rising income and brand awareness, the industry’s branded share is up from 57% in FY15 to 72% in FY23 (to touch 80% ahead). RR Kabel is well placed given its strong product portfolio, robust distribution network, brand image, and product quality.”

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)