RR Kabel made a strong debut on the bourses today, September 20, 2023. The stock listed at 1,180 on the NSE, a 14 percent premium to the issue price of ₹1,035. Meanwhile, on the BSE, it listed at ₹1,179, a 13.9 percent premium.
The ₹1,964-crore initial public offering (IPO) of the consumer electrical firm was open for subscription between September 13 and Sept 15 at a price band in the range of ₹983-1,035 per share.
The issue consisted of a fresh issue worth ₹180 crore and an offer for sale (OFS) of 1.72 crore shares by promoters as well as investor TPG Asia. The promoter stake post the sale would reduce to 62.8 percent. The net proceeds from the fresh issue would be utilised towards repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions and general corporate purposes.
The issue was overall subscribed to 18.69 times. The allocation for qualified institutional bidders (QIBs) was booked 52.26 times, while the portion for non-institutional investors fetched 13.23 times bids. The portion reserved for retail investors was booked 2.13 times at the end of the third day of bidding.
Incorporated in 1995, RR Kabel is one of the leading companies in the Indian consumer electrical industry (comprising wires and cables and fast-moving electrical goods), with an operating history of over 20 years in India. RR Kabel is the 5th largest player in the wires and cables market in India, representing 5 percent market share by value as of March 31, 2023.
It generates the highest share (74 percent as of FY23) of the C&W revenue from B2C in the industry. RR Kabel is the fastest-growing consumer electrical company in India, growing at a CAGR of 43.4 percent between 2021 and 2023.
The listed industry peers of the company include Havells India Ltd, Polycab India Ltd, KEI Industries Ltd, Finolex Cables Ltd, V-Guard Industries Ltd, Crompton Greaves Consumer Electricals Ltd, and Bajaj Electricals Ltd.
Most brokerage firms recommended subscribing to the issue, citing growth potential, diversified product portfolio, industry tailwinds and strong business model. However, pressure on margins and expensive valuations leave little room for upside in the near term.
Ahead of the issue, RR Kabel raised ₹585.62 crore by allotting 56,58,201 equity shares at ₹1,035 apiece to 54 anchor investors including Abu Dhabi Investment Authority, Government Pension Fund Global, HSBC Global, Ashoka Whiteoak ICAV, Carmignac Portfolio, TIMF Holdings, 3P India Equity Fund, Elara India Opportunities Fund, and Morgan Stanley Asia.