RK Swamy IPO subscribed 3.9 times on Day 2 so far; retail portion booked 13.4x

The initial public offering (IPO) of RK Swamy continued to witness a decent response from the investors during the second day of the bidding process. The issue, which had kicked-off for bidding on Monday, March 4, was overall subscribed 2.19 times on day one.

The Chennai-based RK Swamy is selling its shares in the price band of Rs 270-288 apiece. Investors can apply for a minimum of 50 shares and its multiples thereafter. It is looking to raise Rs 423.56 crore via IPO, which is entirely a sale of Rs 173 crore and offer-for-sale (OFS) of up to 87,00,000 equity shares.

According to the data, the investors made bids for 3,20,37,150 equity shares, or 3.89 times, compared to the 82,32,946 equity shares offered for the subscription by 1.25 pm on Tuesday, Match 05. The three-day bidding for the issue will conclude on Wednesday, March 6.

The allocation for retail investors was subscribed 13.41 times, while the portion reserved for non-institutional investors saw a subscription of 5.57 times. Employee portion was booked 1.11 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for only one per cent as of the same time.

RK Swamy has been engaged in the business of integrated marketing communications, customer data analysis, full-service market research and syndicated studies for more than five decades. Incorporated in 1973, RK Swamy is a data-driven, integrated marketing services provider that leverages digital initiatives.

The grey market premium of RK Swamy has taken a hit after recent listing as the company is commanding a premium of Rs 66 in the unofficial market, suggesting a listing pop of about 23 per cent for the investors. However, the premium in the grey market stood around Rs 90 a day earlier.

Analysts are mostly positive on the issue of RK Swamy citing its long and sound historical record, consistent financial performance, long-term relations with repeat customers and rising demand and expanding market size. However, rising competition, demand for more working capital and changing trends may dent a company's business.

RK Swamy is an intimidating player in India's marketing services landscape, offering a holistic approach to address client’s marketing and advertising requirements. The company asks valuations seem reasonably priced in the line of industry it serves, said Mehta Equities.

"With its proven track record of success, diversified service portfolio and expansive network, we believe RKSL is a long-term investor story. Hence, considering all the limitations," we recommend investors to 'subscribe' the IPO for long term perspective only, it said.

Ahead of its IPO, RK Swamy mobilized Rs 187.22 crore from 18 anchor investors as the company allocated 65,00,937 equity shares at Rs 288 apiece. The company will offer 75 per cent of the net offer for the qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of shares. Retail investors will get 10 per cent of the net offer.

RK Swamy is a top Indian integrated marketing services provider, ranked 8th in estimated operating revenue. The company boasts a prestigious client base with strong loyalty, demonstrated by long-standing relationships and repeat orders, said SMC Global, which is 'neutral' on the stock.

"Investors should be aware that revenue is concentrated among key clients, which presents a potential risk factor. Despite this concentration, RK Swamy's established market position and client relationships make it an attractive option for long-term investors," SMC added, giving it a two-star rating out of five.

SBI Capital Markets, IIFL Securities and Motilal Oswal Investment Advisors are the book running lead managers of the RK Swamy IPO, while Kfin Technologies is the registrar for the issue. Shares of the company are set to list at Dalal Street on March 12, Tuesday, 2024 on both BSE and NSE.

 

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