Rolex Rings IPO: 10 Things You Must Know

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Rolex Rings IPO: 10 Things You Must Know

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Rolex Rings, one of the top five forging companies in India will open for subscription Today. The company is planning to mobilise Rs 731 crore. The company supplies its products on both the domestic as well as international ground to automotive companies and leading bearing manufacturers such as SRF India, Schaeffler India, Timken India, etc. In fiscal 2020, it has exported bearing rings and automotive components to 17 different countries i.e. France, Italy, Germany, Thailand, Czech Republic, USA, and others.

Let's talk about 10 things you must know before subscribing.

1) About:

Incorporated in 2003, Rolex Rings is among the top five forging companies in India. The company manufactures hot rolled forged & machine bearing rings and automotive components that are used across segments i.e. passenger vehicles, 2-wheelers, commercial vehicles, electric vehicles, off-highway vehicles, industrial machinery, wind turbines, railways, etc. A wide range of product offerings such as automotive parts, hot forged and machined alloy steel bearing rings weighing from 0.01 Kg to 163+ kg caters to different industries i.e. automotive, industrial infrastructure, railways, renewable energy, etc.

2) IPO Details:

Rolex Rings will sell shares at Rs 880-900 apiece to raise up to Rs 731 crore, looking for a market value of Rs 2,950 crore at the upper end of the price band. The offer comprises a fresh issue worth Rs 56 crore and sale of shares worth Rs 675 crore by private equity firm Rivendell PE LLC. Rivendell will hold nearly 12% in the company after the share sale. Promoters, who are not selling shares, will own 57.6% after the IPO. The rest will be held by the public.

IPO Date: Jul 28, 2021 - Jul 30, 2021
Face Value: ₹10 per equity share
IPO Price: ₹880 to ₹900 per equity share
Market Lot: 16 Shares
Listing At: BSE, NSE
Finalisation of Basis of Allotment: Aug 4, 2021
Initiation of Refunds: Aug 05, 2021
Credit of Shares to Demat Acct: Aug 06, 2021
IPO Shares Listing Date: Aug 09 2021

3) Financials

Rolex Rings is one of the top five forging companies in India, according to ICRA Ltd. It is a manufacturer and global supplier of hot-rolled forged and machined bearing rings, and automotive components.

  • The company has three manufacturing facilities in Gujarat.
  • Nearly 53.7% of the revenue comes from bearing rings and 38.5% from automotive components.
  • Top 10 customers account for 72.6% of the revenue.
  • Exports account for 56.10% of the revenue.
  • The company supplies to over 20 companies across 17 countries.

4) Business

The company has seen its revenue slip since fiscal 2018-19. It attributed it to a slowdown in automobile industry and subsequent lockdowns due to Covid-19.The company's debt, however, fell in the last three years from Rs 385.10 crore to Rs 250 crore.

5) Peers comparison:

The company competes with Bharat Forge Ltd., Ramkrishna Forgings Ltd. and MM Forgings Ltd.

6) Valuation

The price band for the IPO has been fixed at Rs 880-900 per equity share. At higher price band of Rs 900, Rolex Rings is demanding a price-to-earnings (P/E) valuation of 28.2x (to its restated FY21 EPS of Rs 31.9) with a market cap of Rs 2,451 crore, while its peers namely Ramkrishna Forgings and MM Forgings are trading at a P/E of 123.30 and 37.14, respectively.

7) Grey Market premium:

(As on July 28) The grey market premium of Rolex Rings Limited stood at Rs 460, or about 51% above the IPO price band.

8) Objective of IPO:

  • Funding long-term working capital requirements.
  • General corporate purposes.

9) Pros

  • Among the leading forging companies in India.
  • Strong manufacturing capabilities.
  • Comprehensive product portfolio.
  • Geographically diversified revenue base.
  • Strong and consistent financial performance track record.

10) Cons

  • Change in export policies: Currently, the company generates substantial revenue from exports. However, the scenario could change quickly if international trade policies undergo a massive change.
  • Rolex Rings is most proactive in the forging manufacturing segment. While its products have found applications across various industries, the company could do better in product and portfolio diversification

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Akshay Seth


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