R K Swamy IPO: Weak debut on the cards, experts eye 5% premium

Established in 1973, the company is engaged in the business of integrated marketing communications, customer data analysis, full-service market research and syndicated studies

R K Swamy's Rs 423.56 crore initial public offer (IPO) is expected to showcase a muted listing on the bourses, with estimates suggesting that the stock could debut at Rs 300-310, a premium of about 5 percent from the issue price of Rs 288.

"The flat listing is justified due to cyclicality risk and primarily the company is serving the sector which is volatile by nature," Prashanth Tapse of Mehta Equities said.  He believes that RK Swamy would get more traction post-listing as it would be the first of its kind and a pure play for a one-stop marketing solutions company to be listed on the exchanges.

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Amit Goel of Pace 360 is of the view that the offer looks pricey based on FY24 annualised earnings. However, the management has mentioned that the second half generates the majority of revenues. "We expect the muted listing of RK Swamy Limited IPO could be around 300-310 with a listing gain of around 5 percent", Goel added.

Also read: RK Swamy IPO: 10 things to know before subscribing to the Rs 423-crore issue

Dhruv Mudaraddi of StoxBox said that the company, with an integrated marketing services approach, is strategically positioned to capitalise on India's burgeoning digital infrastructure growth spurred by initiatives such as the 'Digital India' campaign and the expansion of 4G and 5G networks.

"Our sense is that the inherent nature of the digital marketing analytics business is such that it entails higher initial risk followed by a phased replication model upon successful rollout," Mudaraddi said.

The Rs 423-crore issue is a combination of fresh shares worth Rs 173 crore and an offer-for-sale (OFS) of 87 lakh equity shares by promoters and investors worth Rs 250 crore. Promoters Srinivasan K Swamy and Narasimhan Krishnaswamy will be selling 17,88,093 equity shares each in the OFS, while investors Evanston Pioneer Fund LP will be offloading 44,45,714 equity shares and Prem Marketing Ventures LLP 6,78,100 equity shares through OFS.

The company plans to utilise the proceeds from the issue for various purposes, including funding capital expenditure, meeting working capital requirements, investing in IT infrastructure, and establishing new customer experience centers. Additionally, a portion of the funds will be allocated for general corporate purposes.

Established in 1973, R K Swamy operates in the field of integrated marketing communications, customer data analysis, full-service market research, and syndicated studies.

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