Ratnaveer Precision IPO subscribed over two times in three hours; retailers & NIIs lead bidders

The Rs 165-crore initial public offering (IPO) of Ratnaveer Precision Engineering saw a strong response from the investors during the first few hours of the bidding process on day one, led by retail and non-institutional investors. The issue kicked-off for bidding on Monday, September 4.

Ratnaveer Precision Engineering is selling its shares in the range of Rs 93-98 apiece during the three-day bidding process and investors can make a bid of a minimum of 150 equity shares and its multiples thereafter.  The issue includes a sale of 1.38 crore fresh equity shares while its promoter Vijay Ramanlal Sanghavi will offloard 30.40 lakh equity shares via offer-for-sale route.

According to the data, the investors made bids for 2,57,13,150 equity shares, or 2.18 times, compared to the 1,17,88,000 equity shares offered for the subscription by 12.45 pm on Monday, September 4. The issue will close for bidding on Wednesday, September 6, 2023.

The allocation for retail investors fetched 3.31 times bids, while the portion of non-institutional bidders saw a subscription of 2.45 times. However, the portion reserved for the qualified institutional bidders (QIBs) was not even off the mark as of the same time.

Ratnaveer Precision Engineering, which was incorporated in 2002, manufactures stainless steel finished sheets, washers, solar roofing hooks, pipes, and tubes. Ratnaveer Precision Engineering has four manufacturing units located at Vadodara and Ahmedabad, Gujarat.

Ahead of its IPO, Ratnaveer Precision Engineering raised Rs 49.5 crore after finalising the allocation of 50,52,000 equity shares to six anchor investors at Rs 98 per share. Societe Generale, Sixteenth Street Asian Gems Fund, Saint Capital Fund, Coeus Global Opportunities Fund and Leading Light Fund VCC - The Triumph Fund participated in the anchor book.

Brokerage firms are mostly positive on the stock and suggested a bid for the issue citing its strong business fundamental and in-line valuations. However, some analysts have a word of caution for the investors, who have cited rising competition from unorganized players as a key risk for the issue.

Ratnaveer Precision Engineering is a manufacturer of stainless steel products with a wide range of products and multiple designs. The company has a backward-integrated business model, which gives it control over the supply chain, and a research and development (R&D) setup for new product development, said Swastika Investmart in its IPO note.

However, the steel industry is subject to market volatility and economic conditions. Additionally, it is a highly competitive industry. The major concern for investors here is the high debt to-equity ratio and low-margin business. However, the IPO is coming at a fair price-to-earnings (P/E) valuation of 13.49 times, with a 'subscribe for listing gains' rating.

The company has reserved half of the issue, or 50 per cent equity shares, for qualified institutional bidders, while non-institutional investors will get 15 per cent of the allocation in the primary offering. Remaining 35 per cent shares shall be reserved for the retail investors of the issue.

With a robust backward integrated business model, wide Product Portfolio, a good customer base, and no direct peers present in the SS finishing steel industry, makes the RPEL stand out. However, the company lags revenue growth at 18 per cent CAGR when compared to peers, said Hensex Securities, which remains 'neutral' on the issue.

Unistone Capital is the sole manager to the issue, while Link Intime India has been appointed as the registrar to the issue. Shares of the company will be listed at both exchanges- BSE and NSE- with September 14, Thursday, as the tentative date of listing.

 

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