Ratnaveer Precision Engineering IPO: Ratnaveer Precision Engineering IPO opened for public subscription on Monday, 4 September, and will close on Wednesday, 6 September. The bidding for anchor investors concluded on Friday, wherein the company collected Rs 49.5 crore. The price band for its public issue at Rs 93-98 per equity share of face value Rs 10 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 165.03 crore from the IPO. Ahead of the public issue, Ratnaveer Precision Engineering shares’ GMP rose to Rs 48 per equity share, 49% over the upper end of the share price on offer.
The IPO comprises a fresh issue of equity shares worth Rs 135.24 crore and an Offer-For-Sale (OFS) with promoters offloading 30 lakh shares worth Rs 29.79 crore. The company intends to use the net proceeds from the IPO to bolster its capital base, catering to its future capital requirements resulting from business and asset growth. For potential investors, the bidding starts at a minimum of 150 equity shares, with subsequent bids in multiple lots of 150 equity shares each.
Should you apply for the Ratnaveer Precision Engineering IPO?
Choice Broking: Subscribe with caution
“There are no peer companies that have product profiles similar to RPEL. However, we have considered the above companies for benchmarking the valuation. The company’s P/E multiple at a higher price band, after adjusting for post-IPO fully diluted paid-up equity, comes out to 19.0x (to its FY23 EPS of Rs. 5.16), which seems fully priced with respect to its performance.
The company’s top and bottom lines have been growing at a respectable rate, and it has reported an operating margin in the single digits. Since the market in which the company operates is fragmented and where small and medium-sized unorganized players dominate, considering its growth outlook with the growing competition, we assign a “Subscribe with Caution” rating for the issue.”
Stoxbox: Subscribe
“As of 2022, the Indian stainless-steel sector is the second largest producer and consumer in the world, with a total manufacturing installed capacity of more than 6.5 mn tons of stainless steel annually. Despite this, the domestic per capita stainless-steel consumption remained low at 2.5kg in 2019 compared to the global average of 6 kg, thus creating attractive opportunities in the existing sector for companies like RPEL. Over the fiscals, the business has displayed a consistent improvement in its revenue performance along with expansion in its GP margins and EBITDA margins to 11.8% and 9.8% in FY23 compared to 8.8% and 6.8% in FY21, respectively. On the financial front, the ROE and ROCE increased to 29.1% and 12.6% in FY23 in comparison with 10.2% and 10.3% in FY21, respectively, while the debt/equity lowered to 2.2 in FY23 as against 2.7 in FY21. Considering the above factors and based on the upper end of the price band, the issue is valued at a P/E of 13x based on FY2023 earnings which we feel is fairly valued compared to its listed peers. However, it is to be noted that the business operates in a highly fragmented and competitive industry with low barriers to entry which makes its ability to sustain this consistent growth momentum a key monitorable. We, therefore, recommend a “SUBSCRIBE” for the benefit of listing gains for the issue.”
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