RR Kabel IPO attracts 2.67 times bids on Day 3 so far; issue closes today

The Rs 1,964-crore initial public offering (IPO) of RR Kabel continued to witness a strong buying interest on the third and final day of the bidding process. RR Kabel is selling its shares in the range of Rs 983-1,035 apiece during the three-day bidding process and investors can make a bid of a minimum of 14 equity shares and its multiples thereafter. The issue includes a sale of fresh equity shares worth Rs 180 crore, while an offer-for sale (OFS) of up to 17.34 lakh equity shares worth Rs 1,784 crore.

According to the data, the investors made bids for 3,54,93,332 equity shares, or 2.67 per cent, compared to the 1,33,17,737 equity shares offered for the subscription by 12.30 pm on Friday, September 15. The issue opened for bidding on Wednesday, September 13 and will conclude for bidding on Friday, September 15.

The allocation for non-institutional investors was booked 4.26 times, while the portion for qualified institutional bidders (QIBs) fetched 3.81 times bids. The employee portion saw a subscription of 1.93 times and the portion reserved for retail investors was booked 1.34 times at the same time.

Incorporated in 1995, RR Kabel provides consumer electrical products used for residential, commercial, industrial, and infrastructure purposes in two major segments, namely wires and cables including house wires, industrial wires, power cables, and special cables; and FMEG including fans, lighting, switches, and appliances.

Brokerage firms are mostly positive on the issue and most of them have suggested subscribing to the issue citing its growth potential and strong business model. However, the major risk has been cited in terms of valuations which are fully priced compared to peers, leaving little room for upside.

"RR Kabel’s ROE and ROCE were reported at 20.67 per cent and 16.19 per cent in FY23 compared to 29.19 per cent and 18.61 per cent in FY22. The P/E translates to 54.47 times on FY23 EPS of Rs 19.49. The company has scope to grow 25 per cent. Given RR Kabel’s growth is aligned with government initiatives, growing EV demand and China+1 strategy," said SMIFS with a 'subscribe' tag.

A day before its IPO, RR Kabel has raised Rs 585.62 crore by allotting 56,58,201 equity shares at Rs 1,035 apiece to 54 anchor investors including Abu Dhabi Investment Authority, Government Pension Fund Global, HSBC Global, Ashoka Whiteoak ICAV, Carmignac Portfolio, TIMF Holdings, 3P India Equity Fund, Elara India Opportunities Fund, and Morgan Stanley Asia on Tuesday.

"We believe the premiumisation path could potentially result in structural margin expansion and B2C sales are likely to remain strong in coming years, the recent correction in input prices and the strong surge in multiple demand drivers augurs well for the company," said Reliance Securities with a 'subscribe' rating to the issue.

Axis Capital, Citigroup Global Markets India, HSBC Securities & Capital Markets and JM Financial are book running lead managers to the issue, while Link Intime India has been appointed as the registrar for the issue. Shares of the company will be listed at both BSE and NSE with Tuesday, September 26 as the tentative date of listing of shares.

Also Read: EMS IPO allotment today: Check application status, latest GMP, listing date & other details

Also Read: Yatra Online IPO to open today: Here's what the brokerages say about issue, valuations

Disclaimer: The content of this webpage is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product(s). It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. Investment involves risk. You should refer to the offering documentation of the product(s) for detailed information (including risk factors) prior to investing in any product(s). If you have any queries on the discussed subject matter, you should seek independent professional advice. Business Today does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same.