RR Kabel IPO Subscribed 18.69 times at close

RR Kabel IPO worth ₹1,964.01 crore, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹180 crore while the offer for sale (OFS) was worth ₹1,784.01 crore. The IPO pricing was done in the band of ₹983 to ₹1,035 per share with the final price to be discovered through the process of book building. While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the QIB and HNI / NII portion got full subscribed only on the second day of the IPO as did the overall IPO. The retail portion got fully subscribed only on the last day of the IPO. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 18.69 times subscribed at the close of the third and final day of the IPO on 15th September 2023.

Rapid update on the overall IPO response

The IPO saw fairly steady tepid on Day-1 and Day-2 of the IPO and closed with relatively healthy subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the second day of the IPO, with the retail portion getting fully subscribed only on the last day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, RR Kabel Ltd IPO was subscribed 18.69X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively timid and got fully subscribed only on the last day of the IPO. Firstly, let us look at the details of overall allocation.

As of close of 07th August 2023, out of the 133.18 lakh shares on offer in the IPO, RR Kabel Ltd saw bids for 2,488.98 lakh shares. This implies an overall subscription of 18.69X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

On 12th September 2023, RR Kabel Ltd completed the bidding for its anchor allocation. There was a strong and robust response as the anchor investors participated through the process of book building. A total of 56,58,201 shares were allotted to a total of 54 anchor investors. The allocation was done at the upper IPO price band of ₹1,035 (including premium of ₹1,030 per share) which resulted in an overall allocation of ₹585.62 crore. The anchors absorbed 29.82% of the total issue size of ₹1,964.01 crore. Listed below are the 9 anchor investors who got allotted more than 3% each of the anchor shares in the RR Kabel IPO. These 9 anchor investors listed below accounted for 40.11% of the total anchor allocation of RR Kabel Ltd; setting  the tone for retail participation in the IPO.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 37.72 lakh shares of which it has got bids for 1,971.20 lakh shares at the close of Day-3, implying a subscription ratio of 52.26X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the RR Kabel Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 13.23X (getting applications for 374.31 lakh shares against the quota of 28.29 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 15.68X while the below ₹10 lakh bid category (S-HNIs) got subscribed 8.33X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 2.13X at the close of Day-3, showing relatively tepid appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 66.01 lakh shares on offer, valid bids were received for 140.38 lakh shares, which included bids for 116.25 lakh shares at the cut-off price. The IPO is priced in the band of (₹983 to ₹1,035) and has closed for subscription as of the close of Friday, 15th September 2023.

Brief on the business model of RR Kabel Ltd

RR Kabel Ltd Incorporated in the year 1995, and can be classified predominantly as an FMEG (fast moving electrical goods) company. The company makes consumer electrical products for use in residential, commercial, industrial, and infrastructure applications. In terms of its product verticals, RR Kabel Ltd operates in 2 broad verticals. The first vertical is the wires and cables business which includes home wires, industrial wires, and special cables. These are directly supplied to OEM users. The second, and more predominant business vertical of RR Kabel Ltd is the FMEG vertical or the fast moving electrical goods segment, comprising of fans, lighting products, switches, and other electrical appliances.

Currently, RR Kabel Ltd manufactures and markets wires and cable products under the brand name RR Kabel while the FMEG products are sold under the brand name of Luminous Fans and Lights to distinguish the FMEG segment from the cables segment. In 2020, RR Kabel Ltd had acquired Arraystorm Lighting which specializes in light emitting diode (LED) lights and related hardware business. This automatically gave RR Kabel Ltd the access to the fast growing LED lights franchise. This will help RR Kabel Ltd to expand its offerings to cover offices, industrial and warehouse spaces etc.

RR Kabel has 2 manufacturing units located at Waghodia, Gujarat and at Silvassa, apart from 3 integrated manufacturing facilities at Roorkee, Bengaluru, and Gagret for FMEG products. RR Kabel has a strong domestic market and also fair share of the global market. It derives 71% of its revenues from the wires and cables segment with only the balance from the FMEG segment. The issue of RR Kabel Ltd will be lead managed by Axis Capital, Citigroup Global Markets, HSBC Securities and JM Financial. They will act as the book running lead managers (BRLM) to the issue. Link Intime India Private Ltd will be the registrar to the issue.