Ratnaveer Precision Engineering IPO subscribed 42 times on Day 3 so far

The initial public offer (IPO) by Ratnaveer Precision Engineering witnessed huge demand from high net-worth individuals and retail investors on Wednesday, with the issue getting 42 times subscription on the last day of the bidding process. Data showed the quota reserved for non-institutional investors (NIIs) was subscribed 84 times while the one reserved for retail individual investors (RIIs) received 38 times bids. In fact, the quota for HNIs bidding for Rs 2-10 lakh worth shares was subscribed 99 times. The quota for qualified institutional buyer (QIB) was subscribed 16.84 times.

At the upper price band, Ratnaveer Precision Engineering is asking for a PE multiple of 19 with a market cap of Rs 4,752 crore post issue of equity shares and return on net worth of 29.12 per cent. The company’s cost-efficient operations with a proper product mix and high-margin product portfolio will add value to the overall business, said Anand Rathi Shares & Stock Brokers, which has a 'subscribe for long term' rating on the IPO.

Last heard, the grey market premium (GMP) for Ratnaveer Precision Engineering stayed stable at  Rs 60 apiece.

Backed by an expansion of product portfolio, the company's revenue from operations increased at a CAGR of 17.3 per cent from FY20 to FY23, with a 12.4 per cent annual growth in FY23. Ebitda grew at a CAGR of 22.9 per cent for FY20-FY23, with a 65.8 per cent increase in FY23. On the other hand, reported PAT grew 51.6 per cent CAGR during the same period, with 164.3 per cent jump in FY23.

"The return on capital ratios have also increased steeply. RoE increased by 925 bps YoY to 23.6 per cent and RoCE increased by 691 bps to 36.4 per cent. However, the working capital turnover ratio decreased from 9.2 times in FY22 to 7.2 times in FY23, indicating a longer cash conversion cycle. The fixed asset turnover ratio has also fallen consistently over the years from 11.7 times in FY20 to 8.2 times in FY23. While the debt-equity ratio has fallen indicating improvement, it is still very high at 2.17 in FY23," said Choice Broking.

This brokerage has 'Subscribe with Caution' rating on the issue.

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