The initial public offering of Rolex Rings, one of the top five forging companies in India, was subscribed 3.84 times on July 28, the first day of bidding. This is the 30th public issue in 2021.
Investors have put in bids for 2.18 crore equity shares against offer size of 56.85 lakh equity shares, the subscription data available on the exchanges showed.
Retail investors seem bullish as their reserved portion was subscribed 7.1 times and that of non-institutional investors was at 1.34 times. Qualified institutional buyers have put in bids for 3,312 equity shares against their reserved portion of 16.24 lakh equity shares.
The automotive components manufacturer is planning to mop up Rs 731 crore through its public issue that will close on July 30. The offer comprises a fresh issue of Rs 56 crore and an offer for sale of Rs 675 crore by Rivendell PE LLC.
The company has already garnered Rs 219.3 crore from anchor investors at higher end of the price band of Rs 880-900 per equity share.
Also read - Rolex Rings IPO opens today: Should you subscribe?
Rolex Rings is one of the top five forging companies in India in terms of installed capacity and a manufacturer and global supplier of hot rolled forged and machined bearing rings, and automotive components for segments of vehicles including 2-wheeler, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles, industrial machinery, wind turbines and railways, amongst other segments.
It is a major supplier to some of the leading players including SKF India, Schaeffler India, Timken India, NEI and NRB which together account for 81 percent of the market share of Indian bearing industry.
Also read - Rolex Rings IPO opens today: 10 key things to know about the issue and company
The company has a diverse product portfolio with a wide user base. It has long standing relationships with leading clients both in India and in exports markets which can be leveraged for increased market share and improved product mix with high-margin value added products. It also has unutilised capacity including large tracts of land which can be used to service higher customer volumes using existing infrastructure.
"At the same time, Rolex Rings is also dependent on top 10 clients besides being open to the risk of business loss due to Covid-19. It has high proportion of unutilised capacity, besides the high degree of power and fuel costs. At the upper band of IPO price of Rs 900, it is valued at a P/E multiple of 35 (on recalculated EPS excluding the Rs 25 crore deferred tax credit) which is lower than the industry average of 83," said KR Choksey Research.
Considering company's long standing relationships and diverse product portfolio in the wake of not so robust financials, concentrated client base and sub optimal capacity utilisation, the brokerage recommended a 'subscribe' for listing gains.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.