Ratnaveer gets fully subscribed on Day 1
Company’s profit has increased five times in two years from Rs 5.46 crore in FY21 to Rs 25.04 crore FY23.
A new IPO has hit the primary market and it is Ratnaveer Precision Engineering. It has a price band of ₹93-₹98 per share. The IPO will remain open from 4th September to 6th September. It is an IPO on the mainboard but IPO size is not big as the company is looking to raise Rs 165.03 crore. Out of that fresh issue is Rs 135.24 crore and existing shareholders will get Rs 29.79 crore from OFS. Just on the first day the issue got fully subscribed and at the time of writing this story, it was subscribed 1.65 times. In the grey market, the company is enjoying a premium of Rs 48 per share and this implies listing at a permium of 49%.
The company is in the business of stainless steel products.
The objective of IPO is working capital requirements.
Company’s profit has increased 5 times in 2 years from Rs 5.46 crore in FY21 to Rs 25.04 crore FY23.
Although it is fully subscribed there are some risks with the company. The company is in steel business which is very cylical and vulnerable to macroeconomic headwinds. This can lead to volatility in revenues. On that front, one saving grace for the company is diversification. As it caters to various sectors, the diversification can help with volatility becuase if revenues from one sectors are low then it can cater to other sector.
However, it is in the highly competitive industry and it doesnt seem to have any USP. So that means high competitive intensity can put pressures on margins for the company. Although they have backward integration model where they get the raw materials inhouse, this can help company in supplier front, but competition will be in revenue side and given that company doesnt have any pricing power it might impact margins.