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IPO, SME IPO, Rolex Rings IPO

Rolex Rings IPO

Introduction:

Rolex Rings, Incorporated in 2003, based in Rajkot, Gujarat, is one of the country’s largest makers of forged and machined components. The business has established a long-term relationship with its clients.

Rolex Rings made a profit of Rs 86.95 crore for the fiscal year ended March 31, 2021, up from Rs 52.94 crore the previous year, its net profit at a compounded annual growth rate stands at 21.3%.

More than half of the company’s revenue comes from outside the country, with 60 customers in 17 countries, including India.

 Domestic and worldwide markets are spread across two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles), industrial machinery, wind turbines, and railways, among other areas.

It produces a diverse range of bearing rings, that are appropriate for a wide range of end-users. 

Some of the main worldwide and local names that Rolex Rings serves are SKF India, Timken India, and NRB etc.

About the IPO

The SME IPO is worth Rs.731 crore. The new issue is worth 56 crore rupees. This will be utilized to meet long-term working capital needs as well as other corporate needs. The promoters are given a sale offer for the remaining 675 crores. The issue opens on July 28, 2021, and will close on July 30, 2021. The issue is priced at 880 to 900 per equity share

The IPO allocation is as follows: 

About 50 per cent is kept for Qualified Institutional Buyers,15 per cent for non-institutional buyers, and 35 per cent for retail investors.

Objective: The funds obtained through the IPO will be used in the following manner:

  • to support the company’s long-term working capital needs as for other corporate objectives. 
  • Rolex Rings intends to gain from the listing of its equity shares on stock exchanges
  • the improvement of its brand name among existing and future customers the establishment of a public market.
  • The net proceeds would be used to support the company’s day-to-day operations to the tune of Rs 45 crore.

Key details

  Rolex Rings IPO details

  Subscription Dates

28 – 30 July 2021

  Price Band

INR880 – 900 per share

  Fresh issue

INR56 crore

  Offer For Sale

7,500,000 shares (INR660 – 675 crore)

  Total IPO size

INR716 – 731 crore

  Minimum bid (lot size)

16 shares

  Face Value 

INR10 per share

  Retail Allocation

35%

  Listing On

NSE, BSE

 

Strengths:

  • Among the leading forging companies in India. 
  • Long-standing customer relationships 
  • Broad product portfolio
  • Manufacturing capabilities giving scalability, flexibility, 
  • Location advantage 
  • Domain experts and management team
  • Experienced promoters
  • Strong financial performance track record

Risks:

  • The company has resulted in a CDR because of debt 
  • Highly reliant on the performance of India’s and other nations’ automotive sectors. 
  • Impact of the COVID-19 outbreak.
  • Substantial impact on operations, revenues, financial condition, cash flows.
  • the government puts more focus on the electric car segment

Financials: 

  • For the past two years revenue falls by 16% per year. This stands at around 619.75 crores  
  • The company’s total assets have increased during the same time span. 796.92 crore is the total asset for FY 20-21. 
  • Rolex Rings made a profit of Rs 86.95 crore in the previous fiscal year, up from Rs 52.94 crore the year before.
  • In 2020-21, the company’s operating sales were Rs 616.36 crore, up from Rs 666 crore the previous year.
  • The firm has also increased its margins, which were 9.2 per cent in FY18 and 14.1 per cent in FY21.

Recommendation:

  • The casting and forging industry is anticipated to increase at a rate of 13 per cent -14 per cent, up from 5 per cent -7 per cent now, thanks to the government’s attempts to revive the economy.
  • Infrastructure, oil and gas, mining, railroads, and defence are all projected to make significant contributions. The company’s valuations appear to be appealing, with the IPO coming at a PE of 24x, compared to the industry average PE of 47x.

Conclusion

Rolex Rings, a global vehicle parts producer, is ready to launch its public offering as the comeback gathers steam.

By investing in renewable energy, the corporation hopes to lessen its reliance on changing electricity costs and lower its carbon footprint.

The company now operates wind turbines with an installed capacity of 8.75 MW. The company is in the midst of extending its solar project capacity by 12 MW and has already placed purchase orders for the necessary equipment.

The automobile industry is slowly rebounding in 2021 after a tough ride in 2020. Auto sales are being driven by a number of factors, including the relaxation of lockout restrictions and pent-up demand.

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