Stainless steel products maker Ratnaveer Precision Engineering will be the first to float an initial public offer in September 2023.
Here are 10 things to know before you apply for the public issue:
1) IPO Date
The book-built offer opens for subscription on September 4 and closes on September 6.
2) Price Band
The price band for the offer has been fixed at Rs 93-98 per share. The market capitalisation at the upper price band stands at Rs 475.3 crore.
3) Issue Size
The Gujarat-based company intends to raise Rs 165.03 crore from the maiden public issue, at the upper price band. The IPO comprises fresh issue of 1.38 crore equity shares, amounting to Rs 135.24 crore, and an offer-for-sale (OFS) of 30.4 lakh shares, worth Rs 29.79 crore, by promoter Vijay Ramanlal Sanghavi.
The firm mopped up Rs 49.5 crore from six anchor investors, including Societe Generale, Sixteenth Street Asian Gems Fund, Saint Capital Fund, Coeus Global Opportunities Fund and Leading Light Fund VCC - The Triumph Fund, on September 1.
Also read: Jyoti CNC Automation files papers for Rs 1,000-crore IPO
4) Objectives of the Issue
Ratnaveer Precision Engineering will use the net fresh issue proceeds for working capital requirements amounting to Rs 85 crore, and general corporate purposes, while the OFS money will go to selling shareholder.
5) Lot Size
The minimum bid can be made for 150 equity shares and in multiples of 150 shares thereafter. Retail investors can invest a minimum of Rs 14,700 for a single lot of 150 shares and their maximum investment will be Rs 1,91,100 for 13 lots (1,950 shares), at upper price band. Retail investors are allowed to invest up to Rs 2 lakh in the IPO.
High networth individuals with the category of minimum-maximum investment limit of Rs 2-10 lakh, can make an application for a minimum 2,100 shares worth Rs 2,05,800 and at the maximum, they can invest for 10,200 shares worth Rs 9,99,600.
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The company has reserved half of the offer size for qualified institutional buyers (QIB). Further, 15 percent of total issue is reserved for high networth individuals and the remaining 35 percent for retail investors.
6) Company Profile
The stainless steel product manufacturer with four manufacturing units in Gujarat is focused on the production of finished sheets, washers, solar roofing hooks, pipes and tubes. Stainless steel is a value-added product with high corrosion resistant properties.
The company provides products to several industries including automotive, power, oil and gas, pharmaceuticals, electromechanics, building & construction, electrical appliances, and kitchen appliances.
7) Financial Performance
The company recorded healthy financial performance in the years gone by. Net profit in the year ended March FY23 grew massively by 164.3 percent to Rs 25 crore compared to the previous year on robust operating performance. EBITDA (earnings before interest, tax, depreciation, and amortisation) climbed 65.7 percent on-year to Rs 45.6 crore in FY23, with margin expansion of 306 bps at 9.51 percent compared to FY22.
Also read: Kahan Packaging IPO to open on September 6, issue price at Rs 80 per share
Revenue from operations during the same period rose 12.4 percent to Rs 480 crore, of which 80 percent of business comes from the domestic market and the remaining via exports.
The return on capital employed improved to 12.62 percent from 9.67 percent, and return on equity jumped to 29.12 percent from 15.46 percent during the same period, while the debt-to-equity ratio improved to 2.17 in the year FY23, from 2.89 in previous year.
8) Promoters and Management
Vijay Ramanlal Sanghavi, the Chairman & Managing Director, and his wife Seema Vijay Sanghavi, who are promoters, hold 86.3 percent stake in the company. The rest of shareholding is held by public shareholders, who are mostly other family members.
Babulal Sohanlal Chaplot is the Wholetime Director on the board, and Binita Verdia is the Non-Executive Non-Independent Director, while Ankita Dineshbhai Soni, Bharatkumar Kanchanlal Shah, and Sreeram Vishwanathan Rishinaradamangalam are the independent directors.
Prerana Rajeshbhai Trivedi is the Company Secretary & Compliance Officer of the company, while Nanubhai Panchal is the Chief Operating Officer.
9) Risk Factors
Here are some risk factors:
a) The pricing in the steel industry is subject to market demand, volatility and economic conditions. Fluctuations in steel prices may have a material adverse impact on its business.
b) The company is dependent on a few customers for a major part of revenues.
c) A significant portion of its domestic sales are derived from the western and north zone and any adverse developments in this market could adversely affect the business.
d) Its business is working capital intensive.
e) The company's business is a high volume-low margin business. Sudden changes with respect to price movements in goods being traded or sudden ad hoc anomalies in business or operations could substantially affect the net bottom lines.
f) It has experienced negative cash flows in relation to its operating, investing and financing activities in the last three financial years. Any negative cash flows in the future would adversely affect results of operations and financial condition.
g) The company operates in a highly competitive and fragmented industry with low barriers to entry.
10) Listing Date and GMP
Ratnaveer Precision in consultation with the NSE will finalise the basis of allotment of IPO shares by September 11 and the equity shares will be transferred to demat accounts of successful investors by September 13. The refunds will be credited to bank accounts of unsuccessful participants by September 12.
The trading in its equity shares will commence on the BSE and NSE with effect from September 14, as per the IPO schedule.
Its shares were available at around 50 percent premium in the grey market, over the upper price band, analysts said on anonymity. The grey market is an unofficial platform where the shares can be bought and sold till the listing.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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