Rolex Rings IPO comprises a fresh issue of shares worth ₹56 crore and an offer for sale of up to 75 lakh equity stocks by Rivendell PE LLC (formerly known as NSR-PE Mauritius LLC).. Rolex Rings IPO Limited of ₹731 crore opens for subscription on Wednesday July 28 and will close on Friday i.e., July 30, 2021. The price band for the initial share sale is fixed at ₹880-900 per share.
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Rolex Rings IPO Details:
| Issue Period | 28th July – 30th July, 2021 |
| Issue Details | Fresh Issue of Equity Shares upto ₹ 56 Cr + OFS of 75,00,000 Equity Shares |
| Issue Size (₹ Cr) | ₹ 716 – 731 Cr |
| Bid Lot | 16 Shares |
| Price Band | ₹ 880 – 900 |
| Issue Structure : | |
| QIB | 50% of the offer |
| NIB | 15% of the offer (109.65 Cr) |
| Retail | 35% of the offer (2,842,778 Shares- ₹ 255.85 Cr) |
| Appls for 1x Retail | 1.78 Lacs |
| BRLMs | Equirus Capital, IDBI Capital, JM Financial |
| Registrar | Link Intime India Pvt. Ltd. |
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Updates:
- ANCHOR ISSUE:
Rolex Rings raised Rs 219 crore from anchor investors ahead of its IPO. HDFC Mutual Fund (MF), ICICI Prudential MF, Axis MF, Aditya Birla Sun Life MF, SBI MF, Kotak MF, L&T MF and HDFC Life Insurance Company are among the anchor investors.
About Rolex Rings
- Rolex Rings Limited started as a business in partnership under the name of ‘Rolex Industries’ in 1977-1978. It started manufacturing operations in 1988 with its first manufacturing plant set up in Rajkot.
- Today, Rajkot based, Rolex Rings Limted is one of the top five forging companies in India and a manufacturer and global supplier of hot rolled forged and machined bearing rings, and automotive components for segments of vehicles including two wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles), industrial machinery, wind turbines and railways, amongst other segments.
- Rolex Rings has 3 manufacturing units in Rajkot with product portfolio which includes a wide range of bearing rings, parts of gear box and automotive components, among others. Company offers a diverse range of hot forged and machined alloy steel bearing rings weighing from 0.01 kg to over 163 kg, and with inner diameter of 25 mm to outer diameter of 900 mm.
- Its manufacturing infrastructure includes high-speed hotformers from Sakamura and Hatebur and vertical forging lines from Manyo etc.
- As on date of RHP, Rolex Rings had 22 forging lines with a combined installed capacity of 1,44,750 MTPA, machining facilities consisting of 528 spindles with a combined installed capacity of 69 million parts per annum and other machinery including heat treatment furnaces, cold rolling machines and other infrastructure.
- The company supplies domestically and internationally to large marquee customers including some of the leading bearing manufacturing companies, tier-I suppliers to global auto companies and auto OEMs. For Fiscal 2021, Rolex Rings supplied bearing rings and automotive components to over 60 customers in 17 countries, primarily located in India, USA and in European countries such as Germany, France, Italy, and Czech Republic, and Thailand.
- As of June 30, 2021, Rolex Rings Limited employed 1,815 employees.
Rolex Rings IPO: Financials
| Particulars / (₹ In Cr) | 2021 | 2020 | 2019 |
| Revenue from Operations | 616.33 | 665.99 | 904.32 |
| Revenue Growth (%) | -7.46 | -26.35 | – |
| EBITDA as stated | 112.29 | 130.78 | 208.02 |
| EBITDA (%) as stated~ | 18.12% | 19.36% | 22.83% |
| Profit Before Tax | 75.19 | 72.08 | 140.56 |
| Net Profit for the period | 86.96 | 52.94 | 59.04 |
| Net Profit (% ) | 14.03% | 7.84% | 6.48% |
| Equity Share Capital | 23.98 | 23.98 | 23.98 |
| Reserves as stated | 332.75 | 244.12 | 191.36 |
| Net worth as stated | 356.73 | 268.1 | 215.34 |
| RoNW (%) | 24.38% | 19.75% | 27.42% |
| NAV(₹ ) | 148.76 | 111.8 | 89.8 |
| EPS – Basic (₹ ) | 36.26 | 22.08 | 24.62 |
| FV | 10.0 | ||
| Equity Post IPO | 27.23 | ||
| IPO Price | 900 | ||
| EPS (Post IPO) FY21 | 31.94 | ||
| PE | 28.18 | ||
| Market Cap | 2451 | ||
| Market Cap / Sales | 4.0 |
Pros
- Based in Rajkot, Gujarat, Rolex Rings is among the leading manufacturers of forged and machined components in the country.
- Company supplies domestically and internationally to large marquee customers
- They have been able to maintain long standing relations with their customers. 70% of company’s 10 largest customers have been with them for over a decade.
- Company intends to de-risk their business’ dependence on changes in power tariffs and reduce their carbon footprint through investment in renewable energy.
- Good manufacturing infrastructure.
- Experienced Management Team with Proven Track Record.
Cons
- Past record of loan default
- Heavily dependent on the performance of the automotive sector.
- Company’s business requires a substantial amount of working capital, primarily to maintain optimum inventory levels of raw materials, components which are work-in-progress and finished goods as well as to offer credit to customers.
Rolex Rings IPO: Assessment
- The Indian bearing market is estimated at ₹ 12,000 crore. Bearing Rings form one of the most critical and largest raw material cost for the bearings sector and at ~₹ 2,200 crores.
- Rolex Rings Limited is one of the top five forging companies in India (Source: ICRA Report)
- The forged bearing rings contribute 54% of its Rs. 616 cr revenue in FY21. Rest is made up by Auto components.
- Rolex Rings derives 56% revenues from exports.
- The Company currently has a credit rating of CARE BB; Stable i.e. moderate risk of default regarding timely servicing of financial obligations issued by Care Ratings. During a period of July 2017 to June 2019, the Company’s credit rating had been downgraded to CARE D (indicating default or expected to be in default soon) on account of ongoing delays in servicing of its debt obligations.
- Sales for the FYE 2021 was down 7% to Rs. 7844.13 crore precipitated by COVID impact on auto industry.
- On the Post issue Equity share capital, the PE works out to about 28.2x.
- There is no listed bearing ring manufacturing company. But it can be compared to some forging companies like Bharat Forge, MM Forfe, RK Forge which command higher PE. However on an EV/EBITDA basis the cimmpnay is priced higher than some peers and this issue has been priced aggressively.
- Rolex Rings in 2013 entered corporate debt restructuring (CDR), as it faced problems in servicing the debt taken for expansion post the global meltdown in 2007. Company is likely to exit CDR in March 2022 on Rs. 34 cr repayment of restructured debt. The company also faced some slowdown in 2018. undertaken in 2007, faced global meltdown post Lehman crisis.
- Rolex Rings IPO was last reported to be commanding a GMP of Rs. 490.
- There are favorable sectoral tailwinds for auto ancillary and forging companies.
- I intend to apply in Rolex Rings IPO despite an aggressive pricing for possible listing gains or for short term only.
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. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.