Rolex Rings stock is all set to hit the Indian bourses on Monday. The much-awaited Rolex Rings stock will be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on August 9 at 10 am. The Rs 731-crore Rolex Rings initial public offering (IPO) was fully subscribed within minutes of opening last month. It was subscribed a whopping 130.44 times, fifth-highest seen by any IPO in 2021. The overwhelming response from the investors, high grey market premium and positive market sentiment indicate a decent listing for Rolex Rings share on August 9. The stock is expected to list around Rs Rs 1,305-₹1,350, a 45-50 percent premium over the final issue price of Rs 900, experts said.
Ahead of the listing, the unlisted share of Rolex Rings was trading at Rs 400 on August 9. The grey market premium was commanding a price of 1,300 per share, around 45 per cent up from its issue price band of ₹880 to ₹900. The high grey market premium of share also indicated a decent listing of Rolex Rings stock on the BSE and NSE on Monday.
The automaker aimed to raise Rs 731 crore with the help of a fresh issue of equity shares worth Rs 56 crore and an offer for sale of up to 75 lakh equity stocks by Rivendell PE LLC (formerly known as NSR-PE Mauritius LLC). Rolex Rings IPO received bids for 74,16,00,096 shares compared with 56,85,556 shares on offer. The portion for qualified institutional buyers (QIBs) was subscribed 143.58 times. The non-institutional investor category received 360.11 times subscription. The quota reserved for retail individual investors (RIIs) was subscribed 24.49 times.
“With markets and sentiments both being at all time high, Rolex Rings is expected to make a great performance on its debut with decent listing gains despite muted growth in its financials. I expect it to debut with over 40 per cent gains i.e. the stock may list somewhere around ₹1,275 to ₹1,350 as per current the market scenario,” said Abhay Doshi, founder at Unlisted Arena.com.
Established in 2003, Rolex Rings Limited is one of the top five forging companies in India. The company manufactures hot rolled forged or machine bearing rings and automotive components, which are used across segments passenger vehicles, two-wheelers, commercial vehicles, electric vehicles, off-highway vehicles, industrial machinery, wind turbines and railways etc. “The company derives major a major chunk of revenue from two sources — bearing rings and auto components, which recorded decline in revenue over the last three fiscals. Whilst its revenue and EBITDA clocked negative 17% and 26% CAGR, respectively over FY19-FY21, its net profit clocked a healthy 21% CAGR over the same period,” Reliance Securities said in a note.
“Sharp reduction in finance charges due to continued debt reduction and tax credit supported net profit. Notably, while its EBITDA margin skewed to 17.7% in FY21 from 22.2% in FY19, it remains better than its peers like Bharat Forge and RK Forgings,” it added.
“The IPO is valued at 28.2x of FY21 earnings, which appears to be attractive considering peers’ valuations and strong return ratios. Its peers like Bharat Forge and RK Forgings command premium valuations despite generating subpar return ratio compared to RRL. We believe strong outlook for auto ancillary companies especially the forging companies with visible pick-up in demand around the globe should aid Rolex Rings to record healthy growth in the ensuing years,” the brokerage house further mentioned.