KR Choksey IPO report on Rolex Rings
Rolex Rings Limited or "RR" 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 2W, PVs, CVs, off-highway vehicles, EVs, industrial machinery, wind turbines and railways, amongst other segments. It supplies domestically and internationally to large customers including leading bearing manufacturing companies, tier-I suppliers to global auto companies and some auto OEMs. RR 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% of the market share of Indian bearing industry.
Valuation and Outlook
At the upper band of IPO price of INR 900, it is valued at a P/E multiple of 35 (on recalculated EPS excluding the INR 25 Cr deferred tax credit) which is lower than the industry average of 83. 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, we recommend a ‘Subscribe’ for listing gains.
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