RR Kabel – About the Company
RR Kabel, incorporated in 1995, is producing electrical wiring and other products for residential, commercial, industrial, and infrastructure purposes. It operates broadly into two segments The first one is wires & cables, which accounted for 71% of its total revenue in the quarter that ended June FY24, while earn remaining segment is called FMEG (fast-moving electrical goods) such as lights, fans, switches and electric appliances.
RR Kabel Limited is also known for being the first of its kind to introduce the LS0H (Low Smoke Zero Halogen) insulation technology in its wires and cable products. It has also introduced Unilay Core Technology in its products which provides heat resistance and flame retardant properties that make these wires and cables highly safe and long-lasting.
The company operates with two manufacturing units located at Waghodia, Gujarat, and Silvassa, Dadra and Nagar Haveli, and Daman and Diu where mainly wire and cables and switches are manufactured. For manufacturing the FMEG products it is using its operates three integrated manufacturing units located at Roorkee, Uttarakhand; Bengaluru, Karnataka; and Gagret, Himachal Pradesh with the clientele base from domestic market as well as international markets.
RR Kabel IPO Objectives
The total fund raised by RR Kabel through this IPO will be around Rs 1,964 crore. The fresh issue of shares is only worth Rs. 180 crore, while the offer for sale is Rs 1,784 crore offered by the promoters and private equity investors of the company.
The company has outstanding borrowings of Rs. 777.3 crore, hence apart from promoters divesting their stake, one of the main objectives of launching RR Kabel IPO is to pay off the debts of the company. The part of the issue will be used to pay the debt amounting to Rs. 136 crore. The amount remain will be used to fund the general corporate purposes.
RR Kabel IPO Details:
|IPO Open Date||13-Sep-23|
|IPO Close Date||15-Sep-23|
|Face Value||₹5 per share|
|Price||Rs 983 to Rs 1035 per share|
|Lot Size||14 Shares|
|Issue Size||18,975,938 shares
(aggregating up to ₹1,964.01 Cr)
|Offer For Sale||17,236,808 shares of ₹5
(aggregating up to ₹1,784.01 Cr)
|Fresh Issue||1,739,130 shares
(aggregating up to ₹180.00 Cr)
|Issue Type||Book Built Issue IPO|
|Listing At||BSE, NSE|
|QIB Shares Offered||Not more than 50% of the Offer|
|NII (HNI) Shares Offered||Not less than 15% of the Offer|
|Retail Shares Offered||Not less than 35% of the Offer|
RR Kabel IPO Issue Price & Size
RR Kabel IPO Issue Price will be in the range of Rs. 983 to Rs. 1035 per share, between which investors can bid while applying for the IPO. The RR Kabel IPO size amounts to Rs. 1,964 crore at the upper price band. Out of which,180 crores will be raised through fresh issue of equity shares, while Rs. 1,784 crore will be an offer for sale by the promoters and investors group.
RR Kabel IPO Launch Date
The launch date of RR Kabel IPO is September 13, 2023, and the IPO bidding will be open till September 15, 2023. Investors in all types of designated categories can bid or apply for the IPO through their brokers between these dates.
RR Kabel Financial Statements:
|Particulars (Rs in Crore)||FY23 (9M)||FY22 (9M)||FY22||FY21||FY20||CAGR|
|Revenue from Operations||4082.68||2988.54||4385.94||2723.94||2478.52||33.00%|
|Cost of Goods Sold||3351.91||2448.11||3607.98||2149.22||1925.26|
|Share of profit/(loss) of joint venture net of tax||0.28||2.89||4.20||1.10||-0.08|
|Profit / (loss) before tax||167.70||207.24||284.36||181.43||157.68|
|Profit After Tax||124.58||156.03||213.94||135.4||122.40||32.20%|
RR Kabel Financial Performance
The Revenue from operations of RR Kabel stood at Rs 4082.68 crore in the first nine months of FY23. This has registered a CAGR growth of around 33% from the revenue of Rs 2478.52 crore generated in the FY20.
However, the operating profit or EBITDA grew at a CAGR of 22.80% during the same period. The EBITDA margin of the company has come down from 9.35% to 5.94% due to the high cost of goods sold and a significant increase in other expenses too.
The Net Profit of the company was Rs 124.58 crore in the first nine months of FY23, while in FY20, the same was Rs 122.40 crore not showing significant growth during the same period. However, in FY22 company earned quite well and PAT was Rs 213.94 crore. The sluggish Net Profit growth was due to a decline in the Net Profit margins of the company. In FY20 the Net Profit margin was Rs 4.94%, which has come down to 3.05% in the initial nine months of FY23.
RR Kabel IPO Promoters & Shareholding of the Company
As per the RR Kabel IPO DRHP, there are more than 20 members in the promoters and promoters group and out of these Mahendrakumar Ramesh warlal Kabra, Tribhuvanprasad Rameshwarlal Kabra, Hemant Mahendrakumar Kabra, Mahhesh Tribhuvanprasad Kabra and Kirtidevi Shreegopal Kabra are the holding stake of more than 5% each in the company.
The total promoter and promoter group shareholding in the company stands at 66.42%. The remaining 33.58% is held by public shareholders, including TPG which holds 1.85 crore equity shares or a 16.67% stake in the Gujarat-based company.
Promoters Mahendrakumar Rameshwarlal Kabra, Hemant Mahendrakumar Kabra, and Sumeet Mahendrakumar Kabra, as well as Kabel Buildcon Solutions, from the promoter group, will be selling shares in the offer for sale (OFS).Ram Ratna Wires will exit from the holding of the company by selling its 1.23% stake of 13.64 lakh shares via the OFS. However, the American private equity firm TPG Asia VII SF Pte Ltd will sell 1.29 crore equity shares in the IPO.
RR Kabel IPO Major Shareholdings:
|S.No.||Name of the Shareholder||No. of Shares||% of pre-Offer shareholding|
|1||TPG Asia VII SF Pte. Ltd.||23,333,072||21.00%|
|2||Mahendra kumar Ramesh warlalKabra||8,648,588||7.78%|
|3||Tribhuvanprasad Rameshwarlal Kabra||6,896,889||6.21%|
|4||Hemant Mahendra kumar Kabra||6,799,436||6.12%|
|5||Mahesh Tribhuvanprasad Kabra||5,872,077||5.28%|
|6||Kirti devi Shreegopal Kabra||5,656,308||5.09%|
|7||Sumeet Mahendrakumar Kabra||5,537,324||4.98%|
|8||Ram Ratna Research and Holdings Private Limited||5,078,464||4.57%|
|10||Vidhi Mahesh Kabra||4,738,045||4.26%|
|11||Shreegopal Rameshwarlal Kabra||4,629,232||4.17%|
|13||Kabira Shri gopal Rameshwar lal HUF||3,961,160||3.56%|
|15||Priti Amit Saboo||2684524.00||2.42%|
|16||MEW Electricals Limited||2236000||2.01%|
|17||Mamta Ashok Loya||2,160,000||1.94%|
|19||Ram Ratna Wires Limited||1,364,480||1.23%|
|20||Jag-Bid Finvest Private Limited||1,344,000||1.21%|
|21||Monal Rajesh Kabra||1,200,000||1.08%|
|22||Mahendra Kumar Kabra HUF||1,154,208||1.04%|
RR Kabel IPO Offer for Sale Details:
|S. No.||Name of the Selling Shareholder||Number of Equity Shares Being offered in the Offer for Sale (Up to)|
|4||KabelBuildcon Solutions Private Limited||707,200|
|5||Ram Ratna Wires Limited||1,364,480|
|6||TPG Asia VII SF Pte. Ltd.||12,901,877|
Why Invest in RR Kabel IPO?
To invest in the RR Kabel IPOyou must have the reason of strong fundamentals, with encouraging financing growth with a fair valuation of the share price issued in the IPO. We will discuss the valuation of the share price and compare it with listed peers in a later para, but before that let's find out what are the fundamental prospects and scope of the company.
Every business has favourable and unfavourable economic conditions to operate in the market. Depending on the industry scenario and strength of the company, there is scope to grow further in future. And also analyses what are the risks that are associated with the company while operating in such a highly competitive environment.
- As per the reports, the consumer electrical industry in India is likely to grow at a CAGR of 10%till FY27 which will touch the market value of around Rs 2,66,500 crore. And RR Kabel is one the fifth largest player in the wires and cables market in India, with a 5% market share by value as of March 2023.
- RR Kabel is also one of the fastest-growing consumer electrical companies in India, growing at a CAGR of 43.4% during FY21-FY23. As of 2021, it is also the largest exporter of wires and cables from India, in terms of value, representing approximately 11% market share of the export market from India.
- RR Kabel is accredited with the highest number of product and system certifications that show commitment to maintaining the highest quality standards in the industry. This dedication to quality is reflected in every aspect of the company's operations creating a brand awareness among the customers for making quality standard products.
- RR Kabel operates with a focus on safety, quality, and continuous innovation, along with a strong distribution network and connection with electricians, and its digital and physical marketing helping it to develop brand recognition among the customers and in the consumer electrical industry as well.
- After a strategic acquisition in the LED Lights Business, in 2022 the company acquired the home electrical business (HEB) of Luminous Power Technologies Private Limited and obtained a limited and exclusive license to use the Luminous Fans and Lights brand for fan and light products for the specified period with the right to use 61 registered trademarks.
- RR Kabel'sclientsbelongs to both the international markets and domestic markets. It has a clientele that comes from both the domestic market and international markets. And further to expand its business in other geographical areas, it is identifying the micro and nano markets for a specific product.
- One of the highest risks for RR Kabel is operating in this industry with a highly competitive environment where other players like Havels, Finolex Cables, KEI Ind, Polycab India, Crompton Greaves Consumer, Bajaj Electricals and V-Guard Ind are selling the range of the similar products at very competitive price range.
- Maintaining control of production is another big challenge for the company, as it is operating with 6% operating margins that have come down in the last 3 years making it difficult for the company to generate cash flow if operating margins do not improve in the coming years.
- The company is also exposed to the concentration risk of relying on a few distributors for its distribution to overseas markets. Its top ten overseas distributors account for between 85 to 93% of its revenue from operations from outside India. It could be a challenge if it can continue to enter into a similar distribution agreement with its material overseas distributors on similarly favourable terms.
- At the financial end, though the revenue of the company has grown well, the operating profit and net earnings of the company have not grown at the same pace. The cost of materials is rising, company is unable to control the same denting its operating as well as net profit margins is another concerning factor for the company. If the trend continues, and margins decline it can become a loss-making company.
RR Kabel IPO Grey Market Premium
The Grey Market Premium (GMP) RR Kabel IPO is running around Rs 290, which means if taking the upper price band of RR Kabel IPO, the share is going to list around 1325. The GMP of the RR Kabel IPO is further likely to go up depending on the demand and supply of shares in the grey market. However, GMP is not a defined parameter to find out the listing price of any stock, it is like speculation by the traders of unlisted shares just before the listing in the market.
RR Kabel IPO Review & Analysis
RR Kabel IPO is launched mainly to divest some stake or offer for sale by the promoters and private equity investors. At the EPS of 17.09 and share price with an upper band of Rs 1035, the RR Kabel IPO is offered at a P/E of 60.56. On the other hand, its listed peers are trading P/E of 81.15, 53.49, 45.87, 32.22, 76.72, 43.63, and 59.38(September 08, 2023).
Though RR Kabel is not comparable with peers on an apple-to-apple basis, with this P/E, the issue appears fully priced and neither expensive nor available at a lower valuation. However, investors who are looking to invest inRR Kabel IPO can apply with the medium to long–term investment prospects. Investing in the IPO, there are various risk and everyone need to consider or analyze these factors before investing in any company’s IPO.
How to Apply for RR Kabel IPO?
If you are looking to invest the shares of RR Kabel through applyingin the IPO, you need a demat account to hold the securities. Here you can choose Moneysukh to open the trading account and demat account, then apply for the IPO. Using the Moneysukh online platform applying for the IPO is very easy, you just need to follow the steps given below.
Steps to Apply for RR Kabel IPO:
Step 1: Once the bidding process of RR Kabel IPO starts you can apply.
Step 2:Open trade.moneysukh.com in your browser and log in with your User ID & password.
Step 3:Nowgo into the IPO section and find the RR Kabel IPO.
Step 4:Here you need to fill in the various details like price, quantity, and so on.
Note:When youapply in any IPO, make sure to bid at the cutoff price before submitting your application.
Step 5:Nowmake the payment and submit the IPO application successfully.
How to Check RR Kabel IPO Allotment Status?
Checking the IPO status is as as simple applying for the IPO through Moneysukh. But you can check the IPO status only after the bidding process is closed and the allotment date is arrived. You can use various online sources like BSE or NSE to check the RR Kabel IPO allotment status using your IPO application reference number or PAN details.
If RR Kabel IPO is oversubscribed many times, then there is less chance of getting the shares allotted to everyone. If you have not been allotted any shares your money will be refunded into your bank account or the fund will be unblocked.
Also Read: How to Increase the Chances of IPO Allotment
However, if you get the allotment in the IPO, then the shares will be allocated into your demat account before the day of listing. And if the shares of RR Kabel IPOare listed at a very premium price then you can sell the shares and exit from your holdings with the listing gains, or you can hold the shares from the long-term investment point of view.