Ratnaveer Precision Engineering IPO

Ratnaveer Precision Engineering IPO entails the issue of 1,68,40,000 shares that would result in the total issue size of ₹165.03 crore. This has an . offer for sale oof 30,40,000 shares(₹29.79 crore.) and the fresh issue of 1,38,00,000 shares( ₹135.24 crore). Ratnaveer Precision Engineering Limited manufactures stainless steel finished sheets, washers, solar roofing hooks, pipes, and tubes for automotive, solar power, wind energy, power plants, oil & gas, pharmaceuticals, sanitary & plumbing, instrumentation, electromechanics, architecture, building & construction, electrical appliances, transportation, kitchen appliances, chimney liners, and other industries.

IPO opens04-Sep-23
IPO Closes06-Sep-23
IPO Size (Rs.) ₹165.03 Cr
IPO Size (shares)16,840,000 shares
BreakupFresh issue 13,800,000 shares ( ₹135.24 Cr);
 OFS  3,040,000 ( ₹29.79 Cr)
Face Value:(aggregating up to ₹135.24 Cr)
IPO Price in Rs :₹93 to ₹98
Minimum Lot150 Shares
QIB Quota50%
NII Quota15%
Retail Quota35%
 Lead ManagerUnistone Capital
RegistrarLink Intime

About Ratnaveer Precision Engineering Limited:

  • Ratnaveer Precision Engineering Ltd was incorporated in the year 2002 .
  • Mr. Vijay Ramanlal Sanghavi is the company’s promoter.
  • It manufactures stainless steel finished sheets, washers, solar roofing hooks, pipes, and tubeswhich are all highly specialized stainless steel-based products.
  • Ratnaveer Precision Engineering Ltd customizes such stainless products for diverse industries which include automobiles, solar power, wind energy, power plants, hydrocarbons, pharmaceuticals, plumbing, instrumentation, electromechanics, architecture, building & construction etc.
  • It has done new product launches for items like circlip, spring washers, retaining rings, toothed lock washers, serrated lock washers etc.
  • The company produces more than 2,500 washers in different sizes and in line with international standards.
  • It has 4 manufacturing units. Out of these, 2 manufacturing unitsare located at GIDC, Vadodara, Gujarat. The third unit is located at Waghodia, near adodara, Gujarat. The fourth unit, located at GIDC, Vatva which is very near to the Ahmedabad. Broadly,
  • Ratnaveer Precision Engineering Ltd manufacturers SS finishing sheets, SS washers and SS solar mounting hooks at Unit I
  • It manufactures SS pipes & tubes at Unit II.
  • Unit III is the melting unit where melted steel scrap is turned into steel ingots. Unit IV is the rolling unit where flat ingots are further processed into SS sheets; the principal raw materials for SS washers. These units serve the purpose of backward integration and supply supply inputs to Unit 1 & 2.

Ratnaveer Precision Engineering IPO: Financials

Particulars/ Rs. Cr.202320222021
Revenue from operations569.54470.25389.96
Adjusted EBITDA943.01826.32700.48
Adjusted EBITDA margin (%)16.5617.5717.96
Profit/(loss) after tax49.68749.65235.94
PAT margin (%)8.5710.358.93
Equity Share capital29.2514.62514.625
Net worth408.75346.10302.13
Earnings per share (diluted) (in ₹)12.7612.899.32
Net asset value109.9893.3880.33
Total borrowings102.8596.56991.952
Net cash generated from operations275.08132.82529.34
ROCE (%)13.7715.212.16
ROE (%)12.3914.5812.01
Post IPO Share capital30.95
FV10
IPO price441
EPS Fy2316.05
PE Fy2327.47
Market cap in cr.1365
Market Cap/sales2.40
Debt to equity ratio (times)0.260.280.31

Anchor Investors:

Ratnaveer Precision Engineering IPO raised Rs 49.51 crore from anchor investors

Ratnaveer Precision Engineering IPO: Salient Points

  • Ratnaveer Precision Engineering Limited intends to expand its portfolio of SS washers by adding circlips into the product line.
  • Promoters are selling 3040000 equity shares in the IPO; Their stake will get reduced from 83.6% pre-issue to 53.5% post issue. such large stake sale is not comforting.
  • Industry in which Ratnaveer Precision Engineering Limited operates is highly competitive and fragmented including unorganized players.
  • Comapy has about Rs. 200 cr net debt on its books with net debt to equity ratio of 1.7:1. Post IPO tho+is shall stand at , it will be 0.8:1.
  • Credit rating of BBB+ from Brickworks Ratings.
  • Net proceeds of the fresh issue to be used towards funding working capital requirements amounting to Rs 85 crore and balance towards general corporate purposes prepayment.
  • Business is highly working capital intensive, with high inventory on books (~5 months outstanding),
  • Between FY21-23, company’s revenue grew at 15% CAGR. This appears largely due to due to rising commodity prices as production volumes have not increased as depicted below:
ParticularsFYE 23FYE 22FYE 21
Total production (MT)19030.3819747.219711.98
  • Raw material and component cost accounting for ~89% of revenue. In Fiscals 2023, 2022 and 2021, the cost of raw materials and components consumed amounts to ₹ 4,189.58 Million, ₹3,735.22 Million, and ₹ 3,224.55 Million representing 87.32%, 87.49% and 89.65% respectively.
  • Product wise bifurcation in Rs. Million
Product Category (Rs. Million)For the Fiscal
202320222021
SS Finishing Sheets3,057.302,713.052,389.23
SS Washers840.84794.48557.91
SS Solar Roofing Hooks105.4670.2435.91
SS Scrap Metals493.82257.49234.17
SS Tubes & Pipes299.88433.51377.48
Total4,797.304,268.773,594.71
  • Revenue from operations registered a CAGR of 9.64% in last 3 years.
  • profit after tax has grown at a CAGR of 65.65% in last 3 years.
  • Peers:
CompanyFVRevenues (Rs. Cr)Net Profit (Rs. Cr)NPM %P/ERoNW (%)
Ratnaveer Precision Engineering10479.00255.2%1929.12%
M.M. Forgings101,409.001268.9%17.918.23%
Menon Bearings1219.003315.1%27.724.47%
Venus Pipes & Tubes10552.0044.28.0%59.39.83%
  • On FY23 earnings Ratnaveer Precision Engineering IPO is valued at 28x P/E.
  • Ratnaveer Precision Engineering undertook two pre-IPO placements. @ Rs. 72 per share in Jan 2023 (Rs. 5 cr) and @Rs. 67 per share in Dec 2022 (Rs. 67 cr). Now IPO priced @Rs. 98.
  • Iam not very inclined to apply in the Ratnaveer Precision Engineering IPO at this stage even though GMP is quite attractive right now. May consider it on Day 3 if there is strong QIB response. Company looks fairly priced vis a vis its peers. Further due to many IPOs there may be little money to spare.
  • Will list in T2T category & there can be speculative movements like SME stocks.
  • GMP as reported on social media is around Rs. 50.
  • Please do your own diligence. There is good amount of risk in all equity investments.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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