Rishabh Instruments IPO sails through on day 2; retail and NII portion fully subscribed

The Rs 491-crore initial public offering (IPO) of Rishabh Instruments gained some momentum during the second day of the bidding process. The issue, which had kicked off for subscription on Wednesday, August 30, was overall subscribed 75 per cent at the end of first day.

Rishabh Instruments is selling its shares in the range of Rs 418-441 apiece during the three-day bidding process and investors can make a bid of a minimum of 34 equity shares and its multiples thereafter. The company is looking to raise Rs 75 crore via fresh issue and existing promoters and investors will offload 94,28,178 equity shares via OFS aggregating up to Rs 415.78 crore.

According to the data, the investors made bids for 96,82,554 equity shares, or 1.24 times, compared to the 77,90,202 equity shares offered for the subscription by 12 noon on Thursday, August 31, 2023. The three-day bidding for the issue closes on Friday, September 1.

The portion of retail investors saw a subscription of 1.63 times, while the allocation for non-institutional bidders fetched 1.98 times. The quota for qualified institutional bidders (QIBs) was merely one per cent at the same time.

Incorporated in 1982, Rishabh Instruments is engaged in the business of manufacturing, design, and development of test and measuring instruments and industrial control products. The company provides cost-effective solutions to measure, control, record, analyze, and optimize energy and processes through an array of products.

Majority of the brokerage firms are positive on the issue citing the niche products, global presence, rising industrialization, strong return ratio and robust balance sheet. However, a few have suggested to give it a skip on the back of expensive valuations and dependence on exports amid sluggish macroeconomic outlook.
 

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Considering the FY23 EPS of Rs 13.09 on a post issue basis, the company is going to list at a P/E of 33.69 times with a market cap of Rs 1,674.1 crore There are no comparable listed companies in India or globally that engage in a business similar to that of them company. Accordingly, it is not possible to provide an industry comparison, said Marwadi Financial Services in their IPO note.

"We assign a 'subscribe' rating to this IPO as the company has diversified product portfolio and track record of successful integration of acquired businesses across geographies. Also, it is available at a reasonable valuation considering the future growth potential of the company," it added.

A day before its IPO, Rishabh Instruments raised Rs 147.2 crore via 16 anchor investors by allocating 33,38,656 equity shares at a price of Rs 441 apiece, said the company. HDFC Mutual Fund, Nippon Life, Sundaram Mutual Fund, Bandhan Mutual Fund, Aditya Birla Sun Life Insurance, Quant Mutual Fund, Tata Multicap Fund, and 3P India Equity Fund I participated in the anchor book.

The company’s plan is to innovate more products and brands by utilizing its technical know-how and R&D capabilities. Along with that it would target new customers and explore more opportunities outside India by expanding into new geographies, said Religare Broking.

However, the brokerage has given it a 'neutral' rating and has citied high dependence on its Poland manufacturing unit, shortage in the supply of semiconductors and absence of longer long-term contracts as the key risks for the business of the company.
 

Dam Capital Advisors, Motilal Oswal Investment Advisors and Mirae Asset Capital Markets (India) are the lead managers to the issue, while Kfin Technologies has been appointed as the registrar to the issue. Shares of the company will be listed on both BSE and NSE.

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