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RR Kabel Shares List At A 14% Premium Over Its IPO Price; Should You Buy, Sell Or Hold?

Last Updated: September 20, 2023, 10:58 IST

RR Kabel IPO now listed on BSE and NSE. Stay informed about RR Kabel IPO's GMP and subscription status.

RR Kabel IPO now listed on BSE and NSE. Stay informed about RR Kabel IPO’s GMP and subscription status.

RR Kabel became the first T+2 listing in the Indian primary markets as the shares began trading three days after their IPO closed for subscription

RR Kabel Listing on BSE, NSE: Shares of RR Kabel began trading at Rs 1,180, which is a 14 per cent premium to its IPO price of Rs 1,035. The wires and cables company became the first T+2 listing in the Indian primary markets as the shares began trading three days after their IPO closed for subscription.

The company has become the first IPO firm to complete its listing under the T+2 timeline. Under this norm, an IPO firm needs to complete its listing process within three working days from the closure of the IPO.

The Rs 1,964.01 crore worth RR Kabel IPO opened for public subscription on September 13 and closed on September 15. The IPO comprised a fresh issue size of Rs 180 crore and an offer for sale (OFS) segment of up to 1.72 crore equity shares.

The IPO received a decent response from investors with the overall subscription at 18.69 times. All the categories were fully subscribed, led by institutional investors (52.26x). The retail part was the least subscribed at 2.13x.

RR Kabel is India’s fastest-growing consumer electric company over FY21-FY23 and the fifth largest in the wires and cable space with a branded value market share of 7 per cent at FY23-end.

Its revenue, EBITDA and PAT grew at a CAGR of 31 per cent, 16 per cent and 16 per cent respectively over FY20-23. Analysts estimate the same to grow at a CAGR of 16 per cent, 33 per cent and 36 per cent, respectively, over FY23-26.

The company proposes to utilise the net proceeds towards the funding of repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions estimated to be Rs 170 crore.

What Should Investors Do Now?

Anubhuti Mishra, Equity Research Analyst at Swastika Investmart Ltd., said: “RR Kabel Limited, a well-established wire and cable manufacturer with a strong brand and quality products, made its stock market debut today. It listed at ₹1180 per share, 14 per cent higher than its IPO price of Rs 1035, becoming the first IPO to list under the T+3 cycle. Despite the high valuation and the fact that most of the issue was an offer for sale, the IPO was well-received by investors, with a subscription of 18.69 times. The stock witnessed a decent listing today. Now our suggestion to investors is to exit the position after booking listing gain, however, those who want to hold it should maintain a stop loss at 1065.”

Praveen Sahay – Research Analyst, Prabhudas Lilladher Pvt Ltd., said: “We initiate coverage on RR Kabel with a ‘BUY’ rating and TP of Rs1407 valuing at 35x FY25 earnings. We believe RR Kabel is a play on several opportunities in the W&C segment given 1) a strong brand with a diverse product portfolio 2) well-structured capacity expansion plans, 3) an increasing dealers /distribution network, and 4) a distribution-led export business. Although the company has grown its FMEG portfolio inorganically, yet it expects to minimize losses in coming years by transitioning towards premium markets. In FMEG, too, the company has enhanced its brand presence, positioning, and manufacturing capabilities to minimize losses. We estimate Revenue/EBITDA/PAT CAGR of 20.7%/38.8%/44.3% over FY23-26 led by 1) improving business mix 2) operating leverage & cost optimization 3) investments in brand building and 4) increasing distribution reach. Initiate ‘BUY’.”

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