R R Kabel Limited IPO - InvestorZone (2024)

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i. R R Kabel Limited 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. The Indian consumer electrical industry was estimated at ₹1,615.00 billion in Fiscal 2022 and is expected to grow at a compounded annual growth rate (“CAGR”) of 11% until Fiscal 2027 to reach a market value of approximately ₹2,665.00 billion.

ii. The Company sells products across two broad segments – wires and cables including house wires, industrial wires, power cables and special cables and FMEG including fans, lighting, switches and appliances. The product’s end use determines whether the sale is through a business-to-business (“B2B”) or B2C channel. According to Technopak, B2C sales provide higher gross margins as compared to B2B sales.

iii. The Company undertakes the manufacturing, marketing and sale of wires and cable products under ‘RR Kabel’ brand, and a variety of consumer electrical products, including fans and lights under the ‘RR’ brand, which is licensed by the Company. The Company also manufactures, markets and sells fans and lights under the ‘Luminous Fans and Lights’ brand, which is licensed by the Company. The Company ‘RR Kabel’ brand has over 20 years of operating history, while the ‘RR’ and the ‘Luminous Fans and Lights’ brands, which are licensed by the Company, have over 7 years and over ten years of operating history, respectively.

Competitive Strengths

i. Scaled B2C business in the large and growing wires and cables industry
ii. Diverse suite of products driven by our focused research and development efforts with global certifications and accreditations
iii. Extensive domestic and global distribution network

Objects of the R R Kabel Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects:i. Repayment or prepayment, in full or in part, of borrowings availed by the company from banks and financial institutions.ii. General corporate purposes.Total number of shares issues: -i. Fresh Issue is 1,739,130 shares,ii. Offer for Sale is 17,236,808 shares.

DRHP of R R Kabel Limited IPO

RHP of R R Kabel Limited IPO

R R Kabel Limited IPO Details:

Open Date:	Sep 13 2023
Close Date:	Sep 15 2023
Total Shares:	18,975,938
Face Value:	₹ 5 Per Equity Share
Issue Type:	Book Built Issue IPO
Issue Size:	1,964.01 Cr.
Lot Size:	14 Shares
Issue Price:	₹ 983 - 1035 Per Equity Share
Listing At:	NSE,BSE
Listing Date:	Sep 20 2023

Promoters And Management:

1. Tribhuvanprasad Rameshwarlal Kabra: Serving as the Executive Chairman, he has been part of the company's Board of Directors since May 13, 1997. Mr. Kabra completed his secondary education at Hindi High School, Mumbai, and previously held a directorial position at Shramik Winding Wires Private Limited.2. Shreegopal Rameshwarlal Kabra: The Managing Director of the company, appointed on June 27, 2014, has also completed his secondary education from Hindi High School, Mumbai. He brings to the company his industry acumen, having served as the chairman of the wire and cable product council at the International Copper Association and as the president of the Indian Electrical and Electronics Manufacturers’ Association.3. Mahendrakumar Rameshwarlal Kabra: Holding the position of Joint Managing Director, he has been on the Board since February 6, 1995. Mahendrakumar is an alumnus of Hindi High School, Mumbai, and holds a licentiate diploma in mechanical engineering from Veermata Jijabai Technological Institute, Mumbai. He was previously associated with MEW Electricals Limited as a director

Financials of R R Kabel Limited IPO:

A. Balance Sheet

Particular (In Million)	Mar-21	Mar-22	Mar-23
Equity Share Capital	239.24	239.24	478.48
Reserves	6,075	8,112	9,567
Borrowings	4,987	5,211	5,158
Trade Payables	1,135	1,679	4,401
Other Liabilities	4,715	5,265	6,731
Total Liabilities	10,837	12,155	16,291
Net Block	3,860	3,837	4,488
Capital Work in Progress	67	423	436
Investments	406	622	777
Other Assets	352	376	1,174
Total NC Assets	4,684	5,258	6,875
Receivables	4,204	5,171	5,919
Inventory	5,341	7,096	8,602
Cash & Bank	85	123	811
Other Assets	2,838	2,858	4,130
Face value	5	5	5

B. Profit & Loss Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Sales	27,239	43,859	55,992
Raw Material Cost	21,732	35,755	43,698
Purchases of Stock In Trade	1,299	1,566	3,689
Change in Inventory	-1,538	-1,242	-1,629
Employee Cost	1,483	1,889	2,642
Other Expenses	1,962	2,859	4,370
Other Income	220	463	344
Depreciation	448	461	596
EBITDA	2,521	3,495	3,568
EBITDA Margin	9.26%	7.97%	6.37%
Interest	271	233	421
Profit before tax	1,814	2,844	2,560
Tax	460	704	661
Net profit	1,354	2,139	1,899
NPM (%)	4.93%	4.83%	3.37%

C. Cash Flow Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Cash From Operating Activity
Profit From Operation	2,545	3,469	3,586
Receivable	-115	-960	-179
Inventory	-1,588	-1,756	-799
Payable	-668	541	2,401
Other WC Items	-466	420	111
Working Capital Changes	-2,837	-1,754	1,534
Direct Taxes	-419	-733	-582
Net Cash Inflow from Operating Activity	-711	982	4537
Cash from Investing Activity
Fixed assets purchased	-474	-682	-1,083
Fixed assets sold	10	47	5
Dividends received	0.7	1.4	7
Other investing items	405	7	-2,264
Net cash inflow from investing activities	-59	-627	-3,335
Cash from Financing Activity
Proceeds from borrowings	1,213	338	318
Repayment of borrowings	-151	-114	-382
Intrest paid fin	-287	-222	-355
Dividends paid	0	-278	-500
Other financing items	-33	-40	-96
Net Cash Flow	-28	39	187

Comparison With Peers:

Name of the Company	Revenue (In Crore)	PAT (In Crore)	EPS ( in Rs)	P/E	CMP	Mcap (In Crore)
R R Kabel Limited	5599	190	16.83	61.5	1035	11676
Havells India Limited	16911	1,072	17.11	81.5	1450	90883
Polycab India Limited	14,108	1,282	84.8	53.8	5,193	77,896
KEI Industries Limited	6,912	477	52.93	45.8	2,518	22,707
Finolex Cables Limited	4,481	502	32.81	32.1	1,129	17,267
V-Guard Industries Limited	4,050	179	4.15	76.6	315	13,667
Crompton Greaves Consumer Electricals Limited	6,870	476	7.28	43.4	316	20,230
Bajaj Electricals Limited	5,418	231	20.03	59.2	1,183	13,619

* All the data is as per FY23.

Recommendation on R R Kabel Limited IPO:

Review and Recommendation of RR Kabel SME IPO by IZ team is 5/10

Business Overview and Competitive Strengths

R R Kabel Limited has a robust presence in India's consumer electrical industry, specializing in wires, cables, and fast-moving electrical goods (FMEG). Operating for over two decades, the company has cultivated a diverse product portfolio under its flagship brand 'RR Kabel' and licensed brands like 'RR' and 'Luminous Fans and Lights.' The company's strengths lie in its scaled B2C business, which offers higher gross margins than B2B channels. Its extensive product range is backed by targeted research and development and reinforced by a broad domestic and international distribution network.

Objectives of the IPO

The primary goals of the IPO are two-fold:a) To repay or prepay, either fully or partially, the borrowings availed from banks and financial institutions.b) To allocate funds for general corporate purposes.The IPO entails a fresh issue of 1,739,130 shares and an offer for sale of 17,236,808 shares, pegging the issue size at ₹1,964.01 Cr.

Financials

The company's financials reveal steady growth in sales, from ₹2723 Cr in Mar-21 to ₹5599 Cr in Mar-23. However, the EBITDA margin has slightly declined over these years, and the net profit margin has seen a reduction from 4.93% to 3.37% over the same period. These factors could be a point of concern for potential investors.

Peer Comparison and Valuation

When compared to peers like Havells India and Polycab India, R R Kabel's market capitalization is relatively smaller but has a higher P/E ratio of 61.5. Its EPS stands at ₹16.83, somewhat in line with industry counterparts, indicating a competitive edge but also highlighting the need for caution given the valuation.In summary, R R Kabel Limited's IPO comes at a time when the company is well-positioned in a growing market, but potential investors should carefully consider the declining profit margins and valuation metrics compared to industry peers.

Lead Manager of R R Kabel Limited IPO:

Axis Capital Limited
Citigroup Global Markets India Private Limited
JM Financial Consultants Private Limited

Registrar of R R Kabel Limited IPO:

Link Intime India Private Limited

Company Address:

R R Kabel LimitedRam Ratna House, Victoria Mill Compound,Pandurang Budhkar Marg, Worli,Mumbai 400 013Phone: +91 22 2494 9009Email: investorrelations.rrkl @rrglobal.comWebsite:https://www.rrkabel.com/

Discussion on R R Kabel Limited IPO:

7 Comments

Allotment recd yesterday i.e.18/9/23.
But listing on 26/9/23.
It is too late

Listing on 20 Sept 2023.

T+2 listing….

Happening First time in the history of an IPO.

In this market, you will not get anything at low valuation. Everything will be costly. Apply for listing gains and not for investment purpose. Chances of discount in this market is very low.

You are correct. When the market is on a bull run, investors flock in where their is action/activity with out application of any economic sense or logic. I, since, have applied for 1 lot each.

Avoidable from purely fundamental point. Better invest in Polycab Wires or KEI Industries. Both have better profitability and available at cheaper valuations.

apply

Isn’t it very highly priced, Umesh ji ?Havn’t you noticed the P/E ratio? Are you applying? Really sorry.

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