The public issue of energy efficiency solutions company Rishabh Instruments is the first from the mainboard segment opening for subscription this week.
Here are 10 key things to know before you subscribe to the IPO:
1) IPO Date
The bidding for the offer starts today, August 30. The book-built issue will close on September 1.
2) Price Band
The price band for the maiden public issue has been fixed at Rs 418-441 per share.
3) Issue Size
The Nashik-headquartered company intends to raise Rs 490.78 crore from the initial public offering of 1.11 crore equity shares, at the upper price band.
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The public issue comprises a fresh issuance of equity shares worth Rs 75 crore and an offer-for-sale (OFS) up to 94.28 lakh equity shares.
Promoters Asha Narendra Goliya, Rishabh Narendra Goliya, and Narendra Rishabh Goliya (HUF) will be selling 24.17 lakh shares via OFS, while investor SACEF Holdings II will be offloading its entire shareholding of 70.10 lakh shares or 19.33 percent stake via OFS.
It meant the issue will give an exit to the SACEF, the subsidiary of South Asia Clean Energy Fund, an India-focused clean energy private equity fund, which acquired a stake in the company in September 2013.
The company raised Rs 147.2 crore from anchor investors, at the upper price band on August 29, a day before the issue opening.
4) Objectives of Issue
The Rs 62.88 crore from the net fresh proceeds will be utilised mainly for the expansion of Nashik manufacturing facility I, and the rest for general corporate purposes.
The OFS money will go to selling shareholders and the company will not get any money from the OFS.
Also read: SEBI should cut IPO timelines, allow brokers as underwriters: Raamdeo Agarwal
5) Lot Size
Investors can apply for a minimum of 34 equity shares and in multiples of 34 shares thereafter. Retail investors can make a minimum investment of Rs 14,994 (for 34 shares or 1 lot) and their maximum application size would be Rs 1,94,922 (442 shares), as they can not exceed their IPO application size of Rs 2 lakh.
High net-worth individuals with an investment limit between Rs 2 lakh and 10 lakh can invest a minimum of Rs 2,09,916 for 476 shares and their maximum investment will be Rs 9,89,604 for 2,244 shares.
The company has reserved 50 percent of the issue size for qualified institutional buyers, 15 percent for high net-worth individuals and the remaining 35 percent for retail investors.
6) Company Profile
The energy efficiency solution company is engaged in the business of designing, developing, manufacturing and supplying electrical automation devices; metering, control and protection devices; portable test and measuring instruments; and solar string inverters.
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It provides comprehensive solutions to customers looking for cost-effective ways to measure, control, record, analyse and optimise energy and processes through an array of products. In addition, it manufactures and provides aluminium high-pressure die casting through subsidiary, Lumel Alucast which acquired by the company in 2011-2012.
Founded in 1982, Rishabh Instruments claimed to be a global leader in providing analog panel meters, and among the leading global companies in terms of providing low voltage current transformers.
It has five manufacturing facilities – two in India (Nashik, Maharashtra), two in Poland and one in China. Subsidiary, ESL, focuses on developing software solutions such as MARC.
The company, following the business-to-business model, serves sectors like industrial (FMCG, pharmaceutical, cement, steel, railways), power (generation, transmission and distribution, renewable energy, oil and gas), OEM industries (transformer, motor, cable and special machine manufacturers) and new applications (data centre, laboratories, semiconductors, consumer electronics, and building automation).
7) Financial Performance
The company recorded a healthy topline growth with revenue from operations growing 21.1 percent on-year to Rs 569.5 crore for the year ended March FY23, but profit came in almost flat at Rs 49.69 crore against Rs 49.65 crore during the same period, impacted by weak operating margin, given the high input cost and employee expenses.
EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 4.3 percent YoY to Rs 76 crore in FY23, with margin falling 216 bps to 13.35 percent over last year, while net profit margin dropped 178 bps to 8.57 percent during the same period.
Even the return on capital employed (ROCE) declined to 13.77 percent in FY23 from 15.20 percent in FY22 and return on equity (ROE) fell to 12.39 percent from 14.58 percent, but debt-to-equity ratio improved to 0.26 from 0.28 in the same period.
Indian operations contributed 34.26 percent to topline and the remaining 65.74 percent by exports.
8) Promoters
Narendra Joharimal Goliya, who founded Rishabh Instruments in 1982 and has over 4 decades of experience in the electrical and electronic instruments industry, along with other promoters hold 80.67 percent in the company. The remaining stake is held by SACEF.
Narendra is the Chairman and Managing Director on the board, while Parappath Kottekode Ramakrishnan is the Non-Executive Director. Alipt Sharma and Krishnan Ganesan are the Non-Executive Nominee Directors.
Dineshkumar Musalekar, who has been associated with Lumel since 2014, is the Group CEO, while Vishal Prabhakar Kulkarni is the Chief Financial Officer, and Ajinkya Joglekar is the Company Secretary & Compliance Officer of the company.
9) Risk Factors
Here are key risk factors highlighted by brokerages:
a) The company is heavily dependent on the subsidiaries as the subsidiaries generates 67.09 percent of the total revenue as of FY23.
b) Since the company generates almost 66 percent of revenue from exports; company is exposed foreign exchange fluctuations, fluctuation in demand of their products and economic cycle.
c) It is dependent on its Poland manufacturing facility II, which contributed 62.73 percent to its manufacturing of the total products in FY23.
d) If they fail to effectively implement its production schedules, the business and result of operations may be materially and adversely affected.
e) Most of the company’s customers do not commit to long-term contracts, and may cancel their orders, change production quantities, delay production, or change their sourcing strategy.
f) If they cannot execute their strategies to expand existing customer accounts and geographical footprints, business and prospects may be materially and adversely affected.
g) Any shortages in the supply of semiconductors have had and may continue to have a material adverse effect on its results of operations and financial condition.
10) Listing Date
Rishabh Instruments in consultation with the National Stock Exchange of India will finalise the basis of allotment of IPO shares by September 6, and will transfer equity shares to the demat accounts of eligible investors by September 8. The refunds will be credited to unsuccessful investors by September 7.
The listing of equity shares will take place on the BSE and NSE on September 11, as per IPO schedule.
Its shares were available at around 17 percent premium in the grey market, analysts said on anonymity. The grey market is an unofficial platform wherein the IPO shares can be bought and sold till the listing.
Merchant bankers to the issue are DAM Capital Advisors, Mirae Asset Capital Markets (India) and Motilal Oswal Investment Advisors, while KFin Technologies is the registrar to the offer.
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