RR Kabel Ltd. will launch its initial public offering on Wednesday, and the offer will be open till Friday.
The Mumbai-based wire and cable manufacturer plans to raise Rs 180 crore via a fresh issue, and Rs 1,784 crore through an offer for sale, according to its red herring prospectus filed with the Securities and Exchange Board of India on Sept. 6.
Apart from the promoter and other selling groups, TPG Asia VII SF will be selling 1.29 crore shares in the offer for sale.
Issue Details
Issue opens: Sept. 13.
Issue closes: Sept. 15.
Fresh issue size: Rs 180 crore.
Offer for sale size: Rs 1,784 crore.
Total issue size: Rs 1,964 crore (at the upper price band).
Face value: Rs 5 apiece.
Fixed price band: Rs 983 to Rs 1,035 per share.
Lot size: 14 shares.
Issue type: Book-built issue.
Listing: NSE, BSE.
A discount of Rs 98 per equity share has been offered to eligible employees bidding in the employee reservation portion of Rs 10.8 crore.
The company has not undertaken any pre-IPO placement.
Business
RR Kabel operates in two key segments: wires and cables (including house wires, industrial wires, power cables, and special cables) and fast-moving electrical goods, such as fans, lighting, switches, and appliances.
In the quarter ended June, 71% of their wires and cables revenue and 97% of FMEG revenue came from business-to-consumer sales, offering higher gross margin than business-to-business. Their wires and cables segment, established in fiscal 1999, contributed 88.56% of revenue in FY23.
They expanded into FMEG through acquisitions and organic growth, covering approximately 77% of the FMEG industry by value as of March 31, according to Technopak.
As of June 30, the total debt of the company stood at Rs 403.76 crore.
Use Of Proceeds
Repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions. The company plans to deploy Rs 136 crore for this purpose in FY24.
General corporate purposes.
Risk Factors
The company derives most of its revenue from the manufacture and supply of wires and cables segment, which accounted for 92.52% revenue in FY21, 93.74% in FY22 and 88.56% in FY23.
The company is highly dependent on copper and aluminum as raw materials, and is therefore, vulnerable to price fluctuations.
There is a foreign exchange risk as over one fifth of the revenue from operations is derived form geographies beyond India. Depreciation of the Indian rupee may adversely affect the results.
Risk of breakdown or shutdown of manufacturing in the five manufacturing facilities.
The company has substantial capital expenditure and working capital requirements, which may require additional financing.
The company incurred losses in the fast-moving electric goods business of Rs 30 crore in FY21, Rs 29.84 crore in FY22 and Rs 69.53 crore in FY23.
Allocation To Anchor Investors
RR Kabel allocated 56.28 lakh shares to anchor investors ahead of the opening of its public bid opening on Wednesday. The shares were allotted at the upper price limit of Rs 1,035 per equity share.
Anchor investors comprised Abu Dhabi Investment Authority, Government Pension Fund Global, HDFC Mutual Fund, Nippon India Mutual Fund, Aditya Birla Sun Life Mutual Fund, among several others. Fourteen mutual funds applied for the anchor allocation through 29 schemes.
IPO Adda | RR Kabel management talks about the maiden share sale:
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