The Rs 1,964-crore initial public offering of RR Kabel kicked off for subscription today (September 13, 2023) as the company is selling its shares in a fixed price band of Rs 983-1,035 apiece with a lot size of 14 equity shares and its multiples thereof. The three-day bidding will conclude on Friday.
RR Kabel IPO includes a fresh issue worth Rs 180 crore. Besides, promoters Mahendrakumar Rameshwarlal Kabra, Hemant Mahendrakumar Kabra, Sumeet Mahendrakumar Kabra and Kabel Buildcon Solutions and selling shareholders Ram Ratna Wires and TPG Asia VII SF will offload up to 1,72,36,808 equity shares offer-for-sale (OFS) route.
Shares worth Rs 10.80 crore have been reserved for eligible employees of the company, who will get a discount of Rs 98 per share. Overall, 50% of the net offer is reserved for qualified institutional bidders (QIBs). A total of 15% shares of the quota will go to non-institutional investors (NIIs) and the rest 35% is reserved for retail investors.
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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.
Incorporated in 1995, RR Kabel provides consumer electrical products used for residential, commercial, industrial, and infrastructure purposes. Brokerage firms are mostly positive on the issue. Most analysts suggested ‘subscribe’ on the issue, citing growth potential and strong business model. That said, subdued profitability and return ratios, and valuations that look fully priced compared to peers, leave little room for upside in the near term, analysts said.
"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, putting a 'subscribe' rating on the issue.
With solid brand recognition, diversified product profile, scale of operations, certified manufacturing facilities and wide & largest distribution network, RR Kabel is well positioned to capture the growth in the domestic consumer electrical market, said Choice Broking, which has a 'subscribe with caution' rating for the issue. The issue seems to be fully priced considering its subdued profitability and return ratios," it added.
RR Kabel is India’s fastest-growing consumer electric company and the fifth largest in the wires & cables space. The company is also amongst India’s leading wires & cables exporters, which contributed 89% of the company’s FY23 revenues but RR Kabel has been focussing on growing its FMEG business both organically and inorganically, said Equirus Securities with a 'subscribe' rating on the issue.
Outlook remains healthy given the strong industry growth expected across the Indian wires and cables market with broad based growth across sub-sectors while the long-term growth drivers remain in place across both B2C and B2B segments, said LKP Securities with a 'subscribe' recommendation for the IPO.
RR Kabel is strategically positioned for growth with an extensive PAN India distribution network including over 3,400 distributors, 3,600 dealers, 1,14,000 retailers, and an impressive 2,98,000 electricians. This vast network sets it apart as it has the highest reach among its industry peers, enabling the company to effectively serve customers across India, said Ventura Securitieswith a 'subscribe' rating.
RR Kabel IPO GMP today is 150, meaning that RR Kabel IPO shares were trading at a premium of Rs 150 in the grey market on Wednesday. Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of RR Kabel IPO share price is Rs 1,185 apiece, 14.5% higher than the IPO price of Rs 1,035.
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