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  • Writer's pictureJatin Agarwal

RR Kabel IPO


rr kabel logo

Company and IPO Overview:


Founded close to two decades ago, RR Kabel is one of the leading wires, cables and fast-moving electrical goods (FMEG) manufacturing companies in India. It stands as the fifth-largest producer of wires and cables in the country, commanding a 5% market share. It sells products across two broad segments – (i) wires and cables including house wires, industrial wires, power cables, and special cables; and (ii) FMEG including fans, lighting, switches, and appliances.


In Fiscal 2020, it amalgamated the business from one of its group companies, Ram Ratna Electricals Limited (RREL). In Fiscal 2020, it also acquired the light emitting diode (LED) lights and related hardware business (LED Lights Business) of Arraystorm Lighting Private Limited. In May 2022, RR Kabel acquired the corresponding home electrical business of Luminous Power Technologies Private Limited.


RR Kabel undertakes the manufacturing, marketing, and sale of its wires and cable products under the ‘RR Kabel’ brand, and a variety of consumer electrical products, including fans and lights under the ‘RR’ brand, which is licensed by it. The company also manufactures, markets, and sells fans and lights under the ‘Luminous Fans and Lights’ brand. The ‘RR Kabel’ brand has over 20 years of operating history, while the ‘RR’ and the ‘Luminous Fans and Lights’ brands, which are licensed by it, have over 7 years and over 10 years of operating history, respectively.


Manufacturing facilities of R R Kabel Limited are supported by a strong distribution network of 106,626 retail outlets. 35 international product certifications of R R Kabel Limited helps it to maintain trust with its distributors and customers. RR Kabel earns 71% of its income from the sales of wires and cables while the balance 29% comes from FMEG products. The majority of FMEG sales are B2C in nature.


RR Kabel IPO is the next main board IPO which is ready to set its footprints in the stock market and the company is about to raise around ₹ 1964.01 crores via IPO comprising Fresh Issue of ₹ 180 crores and Offer For Sale upto ₹ 1784.01 crores. The price band of the issue is ₹ 983 to ₹ 1035 with a minimum market lot of 14 shares. R R Kabel Limited is also allowing an employee discount of ₹ 98 per share. R R Kabel IPO subscription quota for retail is 35.00%, NII is 15.00% and QIB is 50.00%.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

2746

135

31/03/2022

4432

214

31/03/2023

5634

190


Objectives of the Issue:

1. Complete or Partial, repayment or prepayment of borrowings availed by the company from banks and financial institutions.

2. General corporate purposes.


IPO Details:

IPO Date

13/09/2023-15/09/2023

Face Value

₹5 per share

IPO Price Band

₹983-₹1035 per share

IPO Lot Size

14 Shares

Listing at

NSE, BSE

Basis of Allotment

21/09/2023

Credit of Shares in Demat

25/09/2023

Listing Date

26/09/2023

Pre-Issue Shareholding

66.42%

Post-Issue Shareholding

62.77%

Retail Minimum Lot Size

14 shares (₹14,490)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

12.18

19.22

17.07

P/E

-

-

60.63

EBITDA (%)

9.22

7.98

6.35

Debt/Equity

0.48

0.42

0.36

ROCE (%)

13.59

17.41

15.57


Important things to note about the Company:


Top reasons to consider the IPO:


1. RR Kabel produces and sells a wide range of products in various categories, enabling cross-selling opportunities. It invests in global trends and has the capacity to meet the rising demand for items like 5G telecom cables, EV charging cables, smart fans, and designer lights.

2. RR Kabel has a pan-India distribution network and also a global distribution network that helps it maximise its customer reach.


3. RR Kabel is the fastest-growing consumer electrical company amongst its peers in India, growing at a CAGR of 43.4% between FY21 to FY23. It also puts in additional efforts towards marketing and sales across multiple touch points where customers discover its brands and product offerings.


4. RR Kabel owns and operates five integrated manufacturing facilities that are accredited to Indian and international standards, and capable of precision manufacturing its wide range of products.


5. RR Kabel is very much confident in its ability to secure a substantial portion of the FMEG market growth due to its omni channel presence, both physical and digital sales, a wide-ranging product portfolio at different price points, and its skill in identifying segment product gaps.


Risk Factors to watch out in the IPO:


1. RR Kabel has significant power and fuel requirements and any disruption to power sources could increase its production costs and adversely affect its results of operations and cash flows.


2. Exposure to foreign currency fluctuation risks, particularly in relation to the import of raw materials, export of products and borrowings. This may adversely affect the company’s results of operations, financial condition and cash flows.


3. The availability of counterfeit products and trademark infringement could hurt the company’s business and competitive position.


4. Unfavorable distribution agreements with national or overseas distributors and termination of relationships with key overseas distributors could significantly harm its business, finances, and overall performance.


5. RR Kabel relies on bank-provided channel financing to enhance cash flow and provides guarantees for a portion of its customers’ debt to these banks. Any failure by customers to repay these debts could result in financial losses and adversely affect profitability.


R R Kabel IPO Review: We have to note that the company operates in a low-profit margin industry but at the same time, it has a good market position when comparing itself to the listed players in the market. Thus, if the company manages to increase its turnover/sales volumes it has a good potential for the future.


Crisp Insights:

  • RR Kabel IPO GMP Today: The Company is commanding a GMP of around Rs.220.

  • RR Kabe IPO Review: Listing gains likely as per GMP data.

  • RR Kabe GMP is strong and hence, investors can look to invest for listing as well as long term gains.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.


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