Rolex Rings Limited is on the final day of the company’s initial public offering (IPO). The IPO opened for subscription on July 28 and had set its close date for July 30. The company saw a good amount of subscriptions from the investors on Day 2 of the public issue. The overall subscription from investors totalled up to 9.26 times at the end of the second day which was approximately at 17:00 IST, July 29. The Rolex Rings IPO was subscribed 15.89 times in the retail category, 5.85 times in the Non-Institutional Investors (NIIs) segment and 0 .23 times by the Qualified Institutional Buyers (QIBs), according to information on Chittorgarh. The Rs 731 crore issue received bids for 5.26 crore against an offering size of 56.85 lakh equity shares.
The retail investors took the lead in subscriptions, while the QIBs were behind in terms of the times subscribed to the issue. The QIBs had put in bids for 3,70,096 equity shares against their reserved portion of 16.24 lakh equity shares. Speaking of reservations, the reserved portion for the investors stood at 35 per cent for the Retail category. For the NII segment, the portion reserved in the public issue was 15 per cent. The QIBs had the largest allotment at 50 per cent. The market lot size for the Rolex Rings IPO was 16 shares. The minimum lot size stood at 16 shares, while the minimum application amount was Rs 14,400. On the higher end, the issue had a lot size of 208 shares with an application amount cut-off of Rs 187,200.
Coming to the Grey Market Premium (GMP), the Rolex Rings IPO had a band price of Rs 880 to Rs 900 per share, with a face value of Rs 10 per share. The GMP on day 3 for the public issue stood at Rs 550 according to Chanakyanipothi. The GMP for the issue on day 2 of the IPO was Rs 460. With this in mind, it can be extrapolated that the issue was trading at a premium of Rs 1,430 to Rs 1,450 per share on the grey market, against the established price band of the public issue.
The automotive parts manufacturing company was hoping to close the IPO with a total of Rs 731 crore in funds. This is made up of a Fresh Issue worth Rs 56 crore and an Offer for Sale (OFS) of 7,500,000 shares at Rs 10 per share, which aggregated up to Rs 675 crore. After Friday’s close, the next important dates will be in August. The Allotment date is the first concern as it is set to be on August 4. The following day is set to be the initiation of the refunds for the unsuccessful bidders. On August 6 is when the successful bidders might see the shares accredited to their Demat accounts. Finally, the listing date is likely to be on August 9, though this is yet to be confirmed as the final.
Should You Subscribe?
On the subject of the company’s financial performance, HDFC Securities said in a note, “RRL has been able to significantly improve its financial profile with debt-equity ratio improving from 1.79 times as at March 31, 2019 to 0.70 times as of March 31, 2021 which is also reflected in the credit rating CARE BB,Outlook Stable. It has been able to achieve this through net cash flow from operating activities which for Fiscal 2021, 2020, and 2019 were Rs. 592.14 million, Rs. 1,837.77 million, and Rs. 1,938.05 million respectively. During Fiscal 2021, 2020, and 2019, the Company has spent Rs. 387.29 million, Rs. 160.94 million, and Rs. 367.41 million respectively towards purchase of property, plant and equipment and intangible assets (including capital advances) and capital work in progress. These investments have been made towards expanding its forging and machining capacity, heat treatment facilities, and investments into equipment for generation of solar energy.”
Speaking on the IPO, Choice Equity Broking said, “If we normalize the FY21 earnings (i.e. apply a tax rate of around 17 per cent), the demanded P/E valuation comes out to be 39.4x, which we feel is stretched,”
Choice Broking then added, “It is demanding enterprise value (EV)/Sales of 4.3x, which is at premium to the peer average of 3.9x. The overall outlook for bearing rings and auto components industries remains positive. However, despite its presence in the lucrative industrials segment, the higher demanded valuation is a concern for investors.”
With that, Choice Broking assigned a ‘subscribe with caution’ rating for the public issue of Rolex Rings Limited.
Read all the Latest News, Breaking News and Coronavirus News here.
Comments
0 comment