Book listing gains from Rolex Rings shares
Analysts recommend booking profit in the IPO as the current valuations is at par with listed peers.
Shares of Rolex Rings on Monday made a robust debut at Rs 1,250, a premium of 38.78% on the NSE. At 12:00 pm the stock corrected from its opening price and was trading at Rs 1,165.05, implying a premium of 29.45% over its issue price of Rs 900 per share. On an intraday basis, the counter made a high of Rs 1,263 and a low of Rs 1,105 on the NSE.
Listing strategy
Investors who got allotment are happy thanks to robust listing done by Rolex Rings. So, what should be the strategy now for the stock? Here is what analysts are saying about the stock
Saurabh Joshi of Marwadi Shares and Finance recommended investors book profit on listing as client concentration risk and corporate debt restructuring in the past keeps us cautious from a longer-term perspective. Long term investors are advised to avoid entering the stock at any correction due to the greater risk associated with the investment.
The company listed at P/E of 38.90 which when compared with MM Forgings (P/E 38.02) and Ramkrishna Forgings (P/E 39.77) caps the upside potential of the stock in the short term as well, Joshi added.
“At the current market price, the stock is fairly valued at ~26x FY23E EPS (earnings per share) which captures most positives like its exposure to most bearing manufacturers in India and wide product basket among others,” said Milan Desai, lead equity analyst at Angel Broking.
Even Angel Broking recommends investors to book profits at current levels. While those who were not allotted shares during the IPO (initial public offer), the brokerage firm suggests to wait for a meaningful correction in the stock.
About Rolex Rings
Rolex Rings is among the top five forging companies in India. The company manufactures hot rolled forged & machine bearing rings and automotive components that are used across segments. The company supplies its products on both the domestic as well as international ground to automotive companies and leading bearing manufacturers such as SRF India, Schaeffler India, Timken India, etc.
The firm has 3 manufacturing plants in Rajkot with 22 forging lines with an aggregated installed capacity of 1,44,750 MTPA.
On the financial front, the company posted a revenue of Rs 616.33 crore for the year ended March 31, 2021, compared to Rs 719.54 crore in FY18. Even its bottom line fell given the Covid induced lockdowns. The company reported a profit after tax of Rs 52.94 crore in FY21 versus Rs 72.87 crore profit posted in FY18.
(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)