{"id":836,"date":"2021-07-27T09:22:24","date_gmt":"2021-07-27T09:22:24","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=836"},"modified":"2022-01-31T14:24:40","modified_gmt":"2022-01-31T14:24:40","slug":"rolex-rolled-rings-ipo-will-hit-the-primary-market-on-july-28-should-you-subscribe","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/rolex-rolled-rings-ipo-will-hit-the-primary-market-on-july-28-should-you-subscribe\/","title":{"rendered":"Rolex Rolled Rings IPO will hit the primary market on July 28. Should you subscribe?"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Automobile sector has been hit hard\nafter the pandemic of Covid-19. Due to low purchasing power, general pubic was\navoiding high expenditure purchases. As economy is getting back on track led by\nvaccination drive and global recovery people are buying automobiles again to\ncater their needs and to escape the use of public transport. Automobile sector\nis back now and in order to get benefit of listing gains, Rolex Rolled Rings\nhas rolled out its IPO. The IPO of Rolex Rolled Rings is the 6<sup>th<\/sup> IPO\nin July after G R Infraprojects, Clean Science &amp; Technology, Zomato, Tatva\nChintan Pharma and Glenmark Life Sciences. <\/p>\n\n\n\n<p><strong>Rolex Rolled Rings Ltd. IPO Details<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Issuer Company: Rolex Rings.<\/li><li>Industry: &nbsp;Auto Ancillaries<\/li><li>IPO Size: 731 cr.<\/li><li>Price Band: 880-900<\/li><li>Issue Open Date: 28 July, 21<\/li><li>Issue Close Date: 30 July, 21<\/li><li>Listing Date: 09 Aug, 21<\/li><li>Minimum Lot Size: 16 shares<\/li><li>Face Value: 10 Rs. Per share<\/li><li>Employee Discount:&nbsp; NA<\/li><li>Retail Allocation: 35%<\/li><li>Listing Exchange: NSE, BSE<\/li><\/ul>\n\n\n\n<p><strong>Composition\nof Issue Size<\/strong><\/p>\n\n\n\n<p>The issue size of 731 cr. is a mix of fresh issue of Rs. 56 cr. and offer for sale of Rs. 675 cr. at the upper price band. <\/p>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/glenmark-life-scienceswill-hit-the-primary-market-on-july-27-should-you-subscribe\/\">Glenmark Life Sciences will hit the primary market on July 27. Should you subscribe?<\/a><\/p>\n\n\n\n<p>Offer for Sale: The object of the\nOffer for Sale is to allow PE investor Rivendell LLC to sell an aggregate of up\nto 7.5 million equity Shares held by them amounting at Rs. 675 cr. The company\nwill not receive any proceeds from the Offer for Sale.<\/p>\n\n\n\n<p>Fresh Issue: The company has planned to raise fresh capital\ncomprising an aggregate of 6,22,222 equity shares having Face Value \u20b910\naggregating up to Rs. 56 Cr at the upper price band of Rs. 900. Out of the net\nproceeds<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>An amount of Rs. 45 cr. will be utilized for funding\nlong-term working capital requirements <\/li><li>Rest will be utilized for general corporate\npurpose.<\/li><\/ul>\n\n\n\n<p><strong>About the\nCompany<\/strong><\/p>\n\n\n\n<p>Rolex Rings is one of the top five forging companies in\nIndia in terms of installed capacity, a manufacturer and global supplier of hot\nrolled forged and machined bearing rings. The company manufactures automotive\ncomponents for all segments of vehicles including two-wheelers, passenger\nvehicles, commercial vehicles, off-highway vehicles, electric vehicles,\nindustrial machinery, wind turbines and railways. The company supply\ndomestically and internationally to large marquee customers including some of\nthe leading bearing manufacturing companies, tier-I suppliers to global auto\ncompanies and some auto OEMs. Rolex Rings is one of the key manufacturers of\nbearing rings in India and caters to most of the leading bearing companies in\nIndia. <\/p>\n\n\n\n<p>The company started its manufacturing operations in 1988 and\nits product portfolio includes a wide range of bearing rings, parts of gear box\nand automotive components, among others. The company supplies bearing rings and\nautomotive components to over 60 customers in 17 countries, primarily located\nin India, United States of America and in European countries such as Germany,\nFrance, Italy, and Czech Republic, and Thailand. They have maintained long\nstanding relations with customers and 70% of their 10 largest customers have\nbeen with them for over a decade.<\/p>\n\n\n\n<p>&nbsp;<strong>Industry Growth Drivers<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>India\u2019s real GDP is projected to record an expansion\nof 10.1% in Fiscal 2022, led by the continued normalization in economic\nactivities as the rollout of Covid-19 vaccines gather traction.<\/li><li>Auto component Industry expected to grow at a\nCAGR of 10%-12% during Fiscal 2021- Fiscal 2025.<\/li><li>Government of India has approved a financial\noutlay of Rs. 57,042 cr. over five years under Productivity Linked Incentives\n(PLI) Scheme for automobile and auto components industry.<\/li><li>Indian bearing industry accounts for less than\n4% of the global bearing market, though its share is expected to grow over the\nmedium to long term, supported by increasing industrialization.<\/li><li>Growing demand for railway equipment,\nelectronics, aircraft and motorcycles in the developing countries like India will\nsupport growth for bearings and related products.<\/li><li>ICRA expects that major automotive\nsub-segments to witness strong double digit growth in Fiscal 2022 that may push\ndemand of gorge bearings. <\/li><\/ul>\n\n\n\n<p><strong>Peers\nComparison<\/strong><\/p>\n\n\n\n<p>The company will face tough competition from Bharat Forge,\nRamkrishna Forgings and MM Forgings.<\/p>\n\n\n\n<p>Direct competitors Ramkrishna and MM Forgings have been performers\nlast year. Rising expenditure in industrial construction and other automotive\nsectors have increased the requirements of forgings. Bearing rings are critical\nto a lot of industrial machinery and auto components. The listed peers have\ngained 3-4 times from last year.<\/p>\n\n\n\n<p><strong>Financials<\/strong><\/p>\n\n\n\n<p><strong>Sources of Revenue\n(Rs. in millions)<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"428\" height=\"279\" src=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-178.png\" alt=\"\" class=\"wp-image-839\" srcset=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-178.png 428w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Screenshot-178-300x196.png 300w\" sizes=\"auto, (max-width: 428px) 100vw, 428px\" \/><\/figure>\n\n\n\n<p><strong>Observations<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Revenues of the company are falling continuously\nin last two years.<\/li><li>As on FY21, company is generating 58% of their\nrevenues from bearings rings while 42% of their revenues are generated from\nauto components.<\/li><li>Revenues from \u2018bearing rings\u2019 have fallen 38% in\nlast two years.<\/li><li>While, revenues from \u2018auto components\u2019 have\nfallen 19.37% in last two years.<\/li><\/ul>\n\n\n\n<p><strong>Financial Statements<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n  Income Statement (In Millions)\n  <\/td><td>  FY21<\/td><td>   FY20<\/td><td>   FY19   <\/td><\/tr><tr><td>\n  Gross Operating Income\n  <\/td><td>\n  6197.57\n  <\/td><td>\n  6753.32\n  <\/td><td>\n  9112.54\n  <\/td><\/tr><tr><td>   Cost of Employee &amp;    Inventory   <\/td><td>\n  3392.98\n  <\/td><td>\n  3819.92\n  <\/td><td>\n  4947.36\n  <\/td><\/tr><tr><td>\n  Other Expenses\n  <\/td><td>\n  1681.64\n  <\/td><td>\n  1625.64\n  <\/td><td>\n  2084.99\n  <\/td><\/tr><tr><td>\n  EBITDA\n  <\/td><td>\n  1122.95\n  <\/td><td>\n  1307.76\n  <\/td><td>\n  2080.19\n  <\/td><\/tr><tr><td>\n  Depreciation\n  <\/td><td>\n  254.09\n  <\/td><td>\n  265.24\n  <\/td><td>\n  254.40\n  <\/td><\/tr><tr><td>\n  Interest \n  <\/td><td>\n  116.99\n  <\/td><td>\n  321.69\n  <\/td><td>\n  420.19\n  <\/td><\/tr><tr><td>\n  Profit Before Tax\n  <\/td><td>\n  751.87\n  <\/td><td>\n  720.83\n  <\/td><td>\n  1405.60\n  <\/td><\/tr><tr><td>\n  &nbsp;Tax\n  <\/td><td>\n  -117.7\n  <\/td><td>\n  191.42\n  <\/td><td>\n  815.19\n  <\/td><\/tr><tr><td>\n  Profit After Tax\n  <\/td><td>   &nbsp;   869.57<\/td><td>   529.41   <\/td><td>   590.41  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Company\u2019s revenue has been decreased by 18.5% in last two years.<\/li><li>EBITDA margins of the company stood at 18.11%. <\/li><li>Company doesn\u2019t have strong cash flows at Rs. 4.6 cr. and in order to operate smoothly it is raising funds to augment long-term working capital requirements.<\/li><li>More than 50% of total cost is allocated to cost of raw materials and rising input prices of base metals could increase cost further..<\/li><li>The firm is continuously reducing their long-term borrowings, which has further reduced their interest obligations heavily.<\/li><li>PAT grew by 64.25% in FY21.<\/li><li>Debt\/Equity ratio of the company is 0.7x.<\/li><li>Return on Equity or Net Worth is 24.38% while Return on Capital Employed is 19.63%<\/li><li>Considering the upper price band at Rs. 900 and FY21 Earning Per Share (EPS) of Rs. 36.26, the company is demanding a P\/E multiple of 24.8x, much lower than the Industry P\/E of 134x.<\/li><\/ul>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/zomato-has-a-bumper-listing-what-investors-should-do-now\/\">Zomato has a bumper listing! What investors should do now?<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 3,420<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"836\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">6    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Automobile sector has been hit hard after the pandemic of Covid-19. Due to low purchasing power, general pubic was avoiding high expenditure purchases. As economy [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/rolex-rolled-rings-ipo-will-hit-the-primary-market-on-july-28-should-you-subscribe\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":840,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,2,7,10],"tags":[],"class_list":["post-836","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-stock-market","category-investment","category-featured"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/836","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=836"}],"version-history":[{"count":3,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/836\/revisions"}],"predecessor-version":[{"id":1079,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/836\/revisions\/1079"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/840"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=836"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=836"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=836"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}