Rishabh Instruments IPO Review

Rishabh Instruments IPO plans to raise up to Rs 490.78 crore. The IPO comprises of fresh issue of shares worth Rs 75 crore and offer for sale of shares aggregating up to Rs 415.78 crore. Rishabh Instruments Limited is primarily engaged in the business of manufacturing, design, and development of Test and Measuring Instruments and Industrial Control Products.

IPO opens30-Aug-23
IPO Closes01-Sep-23
IPO Size (Rs.) ₹490.78 Cr
IPO Size (shares)11,128,858 shares
BreakupFresh Issue 1,700,680 shares ( ₹75.00 Cr), OFS 9,428,178 shares (₹415.78 Cr)
Face Value:₹ 10
IPO Price in Rs :₹418 to ₹441 per share
Minimum Lot34 Shares
QIB Quota50%
NII Quota15%
Retail Quota35%
 Lead ManagerDAM Capital Advisors, Mirae Asset Capital Markets, Motilal Oswal Investment
RegistrarKfin Technologies

About Rishabh Instruments:

  • Rishabh Instruments is a global energy efficiency solution company focused on electrical automation, metering and measurement, precision engineered products with diverse applications across industries including power, automotive and industrial sectors.
  • It supplies a wide range of electrical measurement and process optimization equipment, and is engaged in designing, developing and manufacturing, and sale of devices significantly under own brand across several sectors.
  • The company provides comprehensive solutions to customers looking for cost-effective ways to measure, control, record, analyse and optimise energy and processes through our array of products.
  • It alsos provide complete aluminium high pressure die casting solutions for customers requiring close tolerance fabrication (such as automotive compressor manufacturers and automation high precision flow meters manufacturers), machining and finishing of precision components.
  • Company is a global leader in manufacturing and supply of analog panel meters, and is among the leading global companies in terms of manufacturing and supply of low voltage current transformers (Source: F&S Report).
  • Lumel is the most popular brand in Poland for meters, controllers, and recorders and Lumel Alucast is one of the leading non-ferrous pressure casting players in Europe (Source: F&S Report).
  • Rishabh Instruments is a vertically integrated player involved in designing, developing, manufacturing and supplying (a) electrical automation devices; (b) metering, control and protection devices; (c) portable test and measuring instruments; and (d) solar string inverters.
  • In addition, it manufacturesand supplies aluminum high pressure die casting through our Subsidiary, Lumel Alucast.
  • Rishabh Instruments also provide certain manufacturing services which include mould design and manufacturing, EMI/EMC testing services, Electronic Manufacturing Services, and software solutions (e.g., MARC).
  • Electrical automation products include energy management software, transducers and isolators, paperless recorders (chartless) and dataloggers, temperature and humidity recorders, I/O converters and temperature controllers among others. The metering, control and protection devices consist of analog panel meters, rotary cam switches, current transformers, shunts, digital panel meters, multifunction meters, multi-load monitoring meters, power quality meters, power quality analyzers, power factor controllers, LV and MV relays, genset controllers, synchronizing units, power supply and battery chargers among others.
  • Under the portable test and measuring instruments portfolio, it manufactures various categories of digital multimeters, digital clamp meters, digital insulation testers, digital earth testers and environmental products such as ultrasonic level/thickness meter, digital luxmeter, non-contact tachometers, DB meter, submarine cable fault locator among others.
  • It also manufactures solar string inverters in India designed for use in photovoltaic installations connected to the grid.
  • In terms of aluminium high pressure die castings, it serves global automation, automotive and other industries with our in- house designed tools (which include die casting moulds and CNC fixtures) and various post casting processes such as high precision machining, surface treatment and heat treatment. O
  • Over the last three financial years, i.e. Fiscals 2023, 2022 and 2021, it has served customers in over 100 countries. Rishabh Instruments is diversified in terms of end users of our products, serving industrial (FMCG, pharmaceutical, cement, steel, railways), power (generation, transmission and distribution, renewable energy, oil and gas), OEM industries (transformer, motor, cable and special machine manufacturers) and new applications (data centre, laboratories, semiconductors, consumer electronics, and building automation).
  • The Company was founded in 1982 by Narendra Joharimal Goliya who is as well as the Chairman and Managing Director. He holds a bachelor’s degree in technology (electrical engineering) from the Indian Institute of Technology, Bombay and a master’s degree in science from the Leland Stanford Junior University.
  • In India, Rishabh has an extensive network of 175 distributors across 81 districts with direct sales conducted through 8 sales and marketing offices which house 53 engineers and 24 sales personnel. 8 Sales and Marketing office locations in India are at New Delhi, Kolkata, Mumbai, Ahmedabad, Pune, Chennai, Bangalore, Hyderabad, and resident sales engineers in 10 cities.
  • Globally, Rishabh has access to over 100 countries through 5 sales and marketing offices and a 339 strong global network of distributors with as of May 31st, 2022. Rishabh has 164 stockists to catering to international customers across 70 countries including Germany, USA, UK, Australia, Middle East, etc. Lumel has 15 stockists in Poland and 20 stockists outside Poland. Lumel resident sales engineers are in UAE, Hungary, Taiwan, Spain, Germany & Cyprus. This extensive network allows the company to provide an array of delivery options while servicing multiple delivery locations despite local-level sales or distribution disruptions.
  • Strong R&D Focus: Rishabh is technology-driven company, and its R&D centers are present across India (Nashik), Poland (Zielona Góra) and China (Shanghai), housing a team of more than 84 skilled engineers. Within India, Rishabh’s R&D center is recognized by the Government of India’s Department of Scientific & Industrial Research (DSIR)—a recognition that Rishabh has leveraged to enhance its R&D effort through Government incentives. In Poland, Lumel has a PCA (Polish Centre for Accreditation) accredited facility that has in-house engineering and manufacturing capabilities.

Rishabh Instruments 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: Partial List

Out of the 33,38,656 equity shares allotted to anchor investors, 25,60,390 equity shares were distributed to 6 domestic mutual funds via a total of 13 schemes for a total of around ₹113 crore, or 76.69% of the total anchor book size.

Rishabh Instruments IPO: Salient Points

  • The Indian Electrical Automation market was valued at USD 6367.8 million in 2022 and is forecasted to grow at a CAGR of 9% to reach USD 9802.6 million by 2027.
  • The continuous emphasis on distributed energy resources (DER) expands the need for Metering, Control and Protection Devices in new buildings, presenting retrofit opportunities in old buildings for newly installed DER systems
  • Indian Portable Test and Measurement market was USD 163.46 million in 2022 — 3.6% of the global total. The market is estimated to grow at a CAGR of 6.9% between 2022 and 2027 and reach USD 228.6 million.
  • The Indian solar string inverter market was valued at USD 778.14 million in 2022 and is forecasted to grow at a CAGR of 10.6% to reach USD 1290.6 million in 2027. India is the second-largest market in Asia Pacific occupying more than 25-30% of the Asia pacific market for solar string inverters.
  • Digital transformation initiatives, electric vehicles and in-vehicle infotainment, and renewable energy projects will keep demand strong.
  • The company aims to use Rs 59.50 crore towards financing the expansion of its manufacturing facility in Nashik and for general corporate purposes.
  • .In the last three Fiscals i.e. 2023, 2022 and 2021, it served customers in over 100 countries including India, Germany, the United States, the United Kingdom and the Middle East. Although no single country accounts for more than 20% of its global sales, a significant portion of its revenue is generated from the sale of exports. The breakup of revenue generated from Indian and overseas operations as a percentage of total revenue from operations is as follows:
S. No.Segment RevenueFiscal 2023Fiscal 2022Fiscal 2021
  (in ₹ million)(in %)(in ₹ million)(in %)(in ₹ million)(in %)
1.Indian operations1,951.1034.261,511.5832.141,257.7032.25
2.Overseas operations3,774.3065.743,190.9267.862,641.8667.75
 Total5,695.401004,702.501003,899.56100

  • Rishabh Instruments began with a single office in Nashik in 1982 and have since steadily extended its presence not only in India but globally as well. It then steadily extended its global reach by way of strategic acquisitions in Europe, the United Kingdom and China. It now has five manufacturing facilities in India, Poland and China.
  • For six years (Fiscals 2005, 2006, 2008, 2009, 2011 and 2012), the Engineering Export Promotion Council, India, recognised Rishabh Instruments as a ‘Star Performer’ in the product group of miscellaneous instruments and appliances (large enterprise).
  • Rishabh Instruments marquee customers include names like ABB India Limited, Siemens Limited, Pronutec S.A, Gossen Metrawatt GmBH, Inox Solar Energy, Saicon Power System and Endress+Hauser Flowtec AG,.
  • Primarily caters to the electrical automation and aluminium industry. In relation to the electrical automation industry, there has been continuous innovation by the Company and supply of products at competitive prices.
  • In Fiscals 2023, 2022 and 2021 revenue generated from top 10 customers were ₹ 1,817.91 million, ₹ 1,128.04 million and ₹ 1,030.39 million, respectively, representing 31.92%, 23.99% and 26.42%, respectively, of total revenue from operations, in such periods.
  • It completed acquisition of “Lumel”, Poland during Fiscal 2012 pursuant to which it gained an aluminum high pressure die casting (HPDC) business which is a distinct segment from its other offerings. HPDC sales contribute 38% to group revenues as depicted below
ParticularsFor Fiscal 2023For Fiscal 2022For Fiscal 2021
% of India revenue (out of the total group revenue)32.9130.9431.24
% of Europe revenue (out of the total group revenue)59.0659.0859.57
% of HPDC sales (out of the total group revenue)37.7636.0638.94
a. % automotive revenue (out of the HPDC revenue)54.9646.5055.32
b. % non-automotive revenue (out of the HPDC revenue)45.0453.5044.68
CAPEX (group level)158.30223.55317.99
Revenue from operations5,695.404,702.503,899.56
EBITDA863.16826.32700.21
EBITDA margin (%)15.1617.5717.96
  • Product map of top Global & India competition across product categories, 2023
 Comparative Analysis of Leading companies- India and Global
Electrical  AutomationMetering, Control and ProtectionPortable T&MSolar String InvertersAluminium High Pressure Diecasting
        DomesticMasibusPSchneider ElectricPMeco InstrumentsCkSolareCSunbeam auto pvt ltdC
Selec ControlsPSecure MetersPMetraviCPowerOneCRockmancycleC
Secure MetersPElmeasurePWacoCGoodWeCEndurance  technologiesC
DeltaPSelec ControlsPMotwanePABBCKailas toolingsC
MultispanPAutomatic ElectricPHTCCSMACMRT CastingsC
        GlobalYokogawaCSocomecPFlukeCHuaweiCConsolidate MetcoC
ChinoPJanitzaPKyoritsuCGrowattCGibbs Die CastingC
OmronPEntesPMeggerPSolarEdgeCFaist GroupC
PhoenixPMBSPHiokiCSungrowCAlcast TechnologiesC
Allen BradleyP

ChintPSonelPFimerCArconicC
  • snapshot of how Rishabh Instruments competes with top companies globally and in India across its 5 product categories.
  • In September 2013, South Asia Clean Energy Fund, an India- focused clean energy private equity fund, through its subsidiary, SACEF, acquired a stake in the Company and holds 19.33% of the pre-Offer capital of our Company on a fully diluted basis. The fund is making a complete exit.
  • The PE fund is making a clean exit, promoters are not selling their stake in the OFS showing their confidence in company’s ability to grow.
  • Management had exuded confidence that company will grow at a CAGR of 20% for next few years. and will have healthy margins.
  • Digital transformation initiatives, electric vehicles and in-vehicle infotainment, and renewable energy projects will keep demand strong.
  • Company is undertaking sizeable Capex at its Nashik plant.
  • Revenue grew at 12% CAGR to Rs. 570 cr, from fiscal 2020 to 2023. In FY23 revenue grew 21% YoY. This is commendable given tough conditions and uncertainties in Europe and its plant being in Poland which is a country next door to Ukraine.
  • On FY23 earnings Rishabh Instruments IPO is valued at 28x P/E.
  • Iam likely to apply in the Rishabh Instruments IPO as it has demonstrated the ability to grow both organically and inorganically and is a technology-driven company with R&D focus. Rishabh Instruments is present in sectors which are likely to enjoy good demand.
  • GMP as reported on social media has been slowly moving up and is around Rs.70-75
  • 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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