Rolex Rings Limited incorporated in 2003 is one of the top five forging companies in India in terms of installed capacity. It is a manufacturer and global supplier of hot rolled forged and machined bearing rings and offers components for two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, and electric vehicles.
It has product portfolio includes a wide range of bearing rings, parts of gear box and automotive components, among others. The company supplies its products on both the domestic as well as international ground to automotive companies and leading bearing manufacturers. It has exported bearing rings and automotive components to 17 different countries. The company has 3 manufacturing plants in Rajkot currently.
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Promoters & Shareholding:
Rupesh Dayashankar Madeka, Jiten Dayashankar Madeka, Manesh Dayashankar Madeka, Pinakin Dayashankar Madeka, and Bhautik Dayashankar Madeka are the company promoter with pre issue holding of 48.80%.
Public Issue Details:
Offer for sale: Fresh issue of approx. 622,222 equity shares of Rs. 10 aggregating up to Rs. 56 Cr and OFS of approx. 7,500,000 equity shares aggregating up to Rs. 675 Cr.
Total IPO Size: Rs. 731 Cr.
Price band: Rs. 880 – Rs. 900.
Objective: For funding long-term working capital requirements and for general corporate purposes.
Bid qty: minimum of 16 shares (1 lot) for Rs. 14,400 and maximum of 13 lots.
Offer period: 28th July 2021 – 30th July 2021.
Date of listing: 9th Aug 2021.
Pros:
- One of the leading forging company in India.
- Strong manufacturing capabilities.
- Professional and experienced management team.
- Comprehensive product portfolio.
- Strong financial performance in the last 3 years.
Cons:
- Significant portion of its revenue from a few key customers & also heavily dependent on performance of automotive sector in India.
- Company has defaulted in payment of certain loans in the past and have undergone Corporate Debt Restructuring (CDR).
- The company does not hold any patents or other form of intellectual property protection in relation to its manufacturing processes.
Subscribe or avoid?
The global bearing industry size is estimated at $50 billion and is expected to grow at a CAGR of 9% between 2020 and 2025. India currently holds about 4% of the market share with an estimated market size of about ₹ 12,000 crore; however owing to the Indian government initiatives along with India’s low-cost labour advantage, global MNCs have also started using the Indian unit as their global sourcing partners which is expected have positive impact on the company and its business.
On the financial side, Company has posted strong revenue & profit growth in the last 3 years. Company reported net profit of Rs. 86.96 Cr, Rs. 52.94 Cr and Rs. 59.04 Cr in the FY21, FY20 and FY19 respectively.
Looking at the valuation perspective, for the last 3 years average EPS of Rs 24.31, the P/E ratio is 37x. On the upper price band of Rs 900 and EPS of Rs 22.08 for FY20, the P/E ratio works out to be 40x. . Hence, the PE range is 37x to 40x at the upper price band. There are listed peers like Ramkrishna Forgings where it is trading at P/E 181x and Mm Forgings at P/E of 30x and industry average P/E is 97x. Hence, the IPO is reasonably priced. Considering all the above factors, we recommend “SUBSCRIBE” to this IPO for the possibility of listing gains and from long term perspective.
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Disclaimer:
This article should not be construed as an investment advise, please consult your Investment Adviser before making any investment decision.