Based in Rajkot (Gujarat) and incepted since 1977-78, Rolex Rings Limited is coming up with its IPO amounting to Rs 731 crore. The offer opens on 28th July 2021. See the offer details below:
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| Offer Details | |
| Offer Size | Rs 731 crore |
| of which | |
| Fresh Issue | Rs 56 crore |
| Offer for sale | Upto 75,00,000 shares |
| Price Band | Rs 880-900 per share |
| Offer Period | July 28- July 30, 2021 |
| Offer Structure | QIBs: upto 50% of the offer NIIs: upto 15% of the offer RIIs : upto 35% of the offer |
| Market Lot | Minimum 1 lot (16 shares) Rs 14400 Maximum 13 lots (208 shares) Rs 187200 |
| Listing on | BSE, NSE |
| BRLM’s | Equirus Capital Private Limited, IDBI Capital Markets and Securities, JM Financial Limited |
| Registrar | LinkIntime |
Objects of Rolex Rings IPO
- Funding long term working capital requirements (Rs 50 crore)
- General corporate purposes
Engaged in the manufacturing operations since the year 1988 of hot rolled forged and machined bearing rings, and automotive components (for two-wheelers, passenger vehicles, commercial vehicles, electric vehicles), industrial machinery, wind turbines, and railways amongst other segments.
The product portfolio includes a wide range of bearing rings, parts of the gearbox, and automotive components such as wheel hubs, shafts, and spindles, etc. Products manufactured are suitable for a wide range of end-user industries such as automotive, railways, industrial infrastructure, renewable energy, among others.
The Issuer has over 60 customers in 17 countries, primarily located in India, the United States of America, and in European countries such as Germany, France, Italy, and the Czech Republic, and Thailand.
The manufacturing infrastructure includes high-speed hot formers from Sakamura and Hatebur and vertical forging lines from Manyo, Mistubishi, SMS Meer, Enomoto, Eumoco, and conventional forging lines integrated with induction heating furnaces. A large part of the existing machining lines consist of spindles from DMG, FUJI, ACE, TSUGAMI, Hyundai, Mazak, Muratec, and domestic CNC Turning centers as well.
The company has 22 forging lines with a combined installed capacity of 1,44,750 MTPA, machining facilities consisting of 528 spindles with a combined installed capacity of 69 million parts per annum, and other machinery including heat treatment furnaces, cold rolling machines, and other infrastructure.
Key Financial Highlights of Rolex Rings
- The topline of the company is showing a decline for the last two fiscals. Total revenue of the Issuer has reduced by 8% to Rs 619.76 crore in FY21 from Rs 675.33 crore in FY20. Further, the revenues reduced by 25% in FY20 when compared to FY19. Unfavorable demand scenario in the automobile industry due to the pandemic resulted in a decline in revenues.
- 56% of the total revenues are derived from exports.
- Due to the decrease in the revenues, EBITDA margins are also declining though net margins showed an increasing trend due to a decrease in the finance cost. Certain long-term obligations were paid off which resulted in lower finance costs. The trend in profitability margins is plotted in the chart.
- The debt to equity ratio is 0.73x as on 31st March 2021.
- Return on net worth is 24.38% as on 31st March 2021.
- The IPO is priced at 24 times its earnings (EPS of Rs 36.26 per share) calculated at the upper price band of Rs 900 per share. The average peer P/E is 77.52 as per RHP, hence the issue is attractively priced. P/BV is 6.05x.
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| Valuation Parameters (as on 31st Mar 2021) | EPS | P/E | NAV | P/BV |
| 36.26 | 24.82 | 148.8 | 6.05 |
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- The peers of the company as per the RHP are Bharat Forge, Ramakrishnan Forgings, and MM forgings.
Conclusion
Rolex Rings is one of the top five forging companies in terms of installed capacity. The company has a comprehensive product portfolio with a geographically diversified revenue base. The financial performance of the company has suffered due to the pandemic in terms of topline and margins for the last two fiscals. The Issuer has planned business expansion in the coming years but any long-term strategy to undertake it is quite unclear. Hence one may apply only for short-term gains depending on the market conditions.
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| Particulars | Bharat Forge | Ramakrishna Forgings | MM Forgings |
| Face Value per share | 2 | 10 | 10 |
| Total Income for FY21 (INR Crores) | 6505.16 | 1294.5 | 761.8 |
| EPS | -2.71 | 6.44 | 19.35 |
| NAV per share | 112.11 | 276 | 201.8 |
| Return on net worth | – | 2.30% | 9.60% |
| P/E | – | 116.39 | 38.64 |
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