RR Kabel shares rise after decent listing; should you book profits or hold the stock?

Shares of RR Kabel, bucked the weakness in the broader markets and extended its marginally gains on the maiden trading session. However, the company saw a partial profit booking after listing but was firm above its listing price in the later end of the session.

The stock was debuted at Rs 1,180, a premium of 14 per cent on the National Stock Exchange (NSE), over its issue price of Rs 1,035. Similarly, the stock kicked off its maiden trading session at similar premium at Rs 1,179 on BSE.

However, RR Kabel extended its gains by another 2 per cent to Rs 1,204, taking the entire gains to more than 16 per cent over the issue price. However, the stock had dropped about 4 per cent to Rs 1,137.60. RR Kabel became the first Indian entity to make a 'T+2' listing at the bourses.
 

However, brokerage firms and analysts are divided on the stock. A few analysts are remaining positive on the stock in long run, suggesting its growth potential and rising market share. However, others suggest investors to book profit after a decent listing gains, citing aggressive valuations.

Praveen Sahay, Research Analyst at Prabhudas Lilladher believes RR Kabel is a play on several opportunities in the W&C segment given strong brand with diverse product portfolio; well-structured capacity expansion plans; increasing dealers /distribution network; and distribution led export business. The company has grown its FMEG portfolio inorganically, he said.

"It expects to minimize losses in coming years by transitioning towards premium markets. In FMEG, the company has enhanced its brand presence, positioning and manufacturing capabilities to minimize losses in FMEG," he added while initiating coverage on the stock with a ‘buy’ and a target price of Rs 1,407, valuing at 35 times FY25 earnings.

RR Kabel Limited made its decent stock market debut today Despite the high valuation and the fact that most of the issue was an offer for sale, the IPO was well-received by investors, with a subscription of 18.69 times, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"We suggest to investors is to exit the position after booking listing gain, however, those who want to hold it should maintain a stop loss at Rs 1,065," she said.

The IPO of RR Kabel was sold in the range of Rs 983-1,035 apiece with a lot size of 14 equity shares. The company raised a total of Rs 1,964 crore from the primary markets. The issue was open for bidding between September 13 to September 15. The issue was overall subscribed 18.69 times.

Shares of RR Kabel were listed on the expected lines. We remain positive on the company and advise investors who have received allotment to hold their shares from a medium to long term perspective, said Dhruv Mudaraddi, Research Analyst at StoxBox.

"It is well-positioned to capture a significant share of growth in the wires and cables industry in India, owing to their longevity in the business, size and scale, B2C mix, scope to improve margins, and healthy cash flow growth going ahead.  The asset turnover ratio of the company, which is a very good sign for a low-margin business like FMEG and electrical goods," he said.

RR Kabel, incorporated in 1995, provides consumer electrical products used for residential, commercial, industrial and infrastructure purposes. Its products are used in two major segments, namely wires and cables. Its FMEG business includes fans, lighting, switches, and other appliances.



Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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