What You Must Know About Rajputana Industries IPO: Price Band ₹36 to ₹38 Per Share

About Rajputana Industries Ltd 

Rajputana Industries Limited, established in 2011, specializes in manufacturing a wide range of non-ferrous metal products, including copper, aluminum, brass, and various alloys, from recycled scrap metal. The company procures scrap metal from open markets and processes it into billets at its manufacturing facility in Sikar, Rajasthan. These billets are sold to various manufacturing companies or used to produce items such as copper rods, aluminum rods, copper mother tubes, brass wires, and super-enameled copper conductors. The products are available in various shapes and sizes to meet customer requirements and market demand. To diversify its product portfolio, Rajputana Industries is venturing into cable production, targeting the construction industry and underwater motor cables. The new cable plant will be installed in the existing production facility using the excess space.

Highlights of Rajputana Industries IPO

Here are some of the highlights of Rajputana Industries IPO on a segment of the National Stock Exchange (NSE).

•    Rajputana Industries IPO is a book-built issue of ₹23.88 crores, consisting entirely of a fresh issue of 62.85 lakh shares.

•    The stock of the company has a face value of ₹10 per share and it is a book-built issue. The book building price band for the IPO has been set in the range of ₹36 to ₹38 per share. The final price discovery will happen in the above price band only.

•    The IPO subscription opens on July 30, 2024, and closes on August 1, 2024. Allotment is expected to be finalized on August 2, 2024, with a tentative listing date on the NSE SME set for August 6, 2024.

•    The price band for the IPO is set at ₹36 to ₹38 per share, with a minimum lot size of 3,000 shares, requiring a minimum investment of ₹114,000 for retail investors.

•    High Net Worth Individuals (HNIs) can invest with a minimum lot size of 2 lots (6,000 shares), amounting to ₹228,000.

•    Holani Consultants Private Limited is the book running lead manager for the IPO, while Bigshare Services Pvt Ltd is the registrar, and Holani Consultants is also the market maker for the issue.

The IPO of Rajputana Industries Ltd will be listed on IPO segment of NSE SME.

Rajputana Industries IPO – Key Dates

Here are key dates pertaining to IPO:

Data Source: Company RHP

In ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of allotment made & lien on the balance amount is automatically released in the bank account. Credit of shares to demat account on Aug 5th, 2024, will be visible to investors under ISIN Code. This credit to the demat account is only applicable to the extent of allocation of shares & if no allocations are made in IPO, then no credit would be visible in the demat account.

Rajputana Industries Capital History

To raise ₹23.88 cr at the upper cap, the company is launching its first book-building route initial public offering (IPO) of 6285000 equity shares at a price of ₹10. A price range of ₹36 to ₹38 per share has been announced. The subscription period for this issue begins on July 30, 2024, and ends on August 1, 2024. An application must be submitted for a minimum of 3000 shares, and then in multiples of those shares. Shares will be listed on NSE SME Emerge upon allotment. The issuance makes up 28.29% of the company's paid-up capital after its IPO. It would use ₹14.00 cr. of the IPO's net proceeds for working capital, ₹4.50 cr. for the purchase of a Grid Solar Power Generating System, and the remaining amount for general corporate uses.

IPO Allocation & Minimum Investment Lot Size

The Rajputana Industries IPO allocates its shares as follows: at least 50% of net offer is reserved for Qualified Institutional Buyers (QIBs), no more than 35% is allocated for retail investors, & at least 15% is reserved for Non-Institutional Investors (NIIs).

Here’s the updated table with the new data:

Data Source: Company RHP

Investors can bid for a minimum of 2,000 shares in the Rajputana IPO, with retail investors needing to invest ₹112,000 for this minimum lot. The same amount applies as the maximum investment for retail investors. High Net Worth Individuals (HNIs) must bid for a minimum of 4,000 shares, amounting to ₹224,000.

Here’s the updated table with the new data:

There are no upper limits for investments by HNIs / NIIs in IPO of Rajputana Industries Ltd.
 
 

About Rajputana IPO

The IPO company, In order to expand its product portfolio, the company is entering into the production of cables, which are primarily used in the construction industry, especially in residential construction, and as underwater cables for motors.

Strength

•    Diverse Product Range: Rajputana Industries Ltd. (RIL) manufactures a wide variety of non-ferrous metal products, including copper rods, aluminum rods, brass wires, and more, catering to diverse customer needs and market demands.

•    Steady Financial Growth: The company has demonstrated steady growth in its financial performance, with increasing total income and net profits over the last three fiscal years.

•    Expansion into New Products: RIL is expanding its product portfolio by entering the cable manufacturing business, which is expected to be operational by September 2024, potentially opening new revenue streams.

•    Strategic Use of IPO Proceeds: The funds raised from the IPO will be used for working capital, purchasing a Grid Solar Power Generating System, and other corporate purposes, which could enhance operational efficiency and sustainability.

Weaknesses

•    Competitive and Fragmented Market: The recycling and manufacturing of non-ferrous metals and cables is a highly competitive and fragmented industry, which may impact the company's market share and profitability.

•    Low Profit Margins: The company's profit margins are relatively low, with PAT margins of 1.08%, 1.22%, and 1.57% for FY22, FY23, and FY24 respectively, which could be a concern for potential investors.

•    High P/E Ratio: Based on FY24 earnings, the IPO is priced at a P/E of 16.45, which may be considered high compared to the industry average, indicating that the issue appears fully priced.

•    No Dividend History: The company has not declared any dividends for the reported periods, which may be a drawback for investors seeking regular income from their investments.
 

Financial Highlights: Rajputana Industries Ltd

The table below captures key financials of Rajputana Industries Ltd for last 3 completed financial years.
Period Ended

Data Source: Company RHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years; i.e., from FY22 to FY24, being the latest year.

•    Rajputana Industries Limited saw a significant revenue increase of 28.11% between the financial years ending March 31, 2023, and March 31, 2024, growing from ₹25,524.98 lakhs to ₹32,701.29 lakhs.

•    The company's profit after tax (PAT) rose by 65.54% in the same period, increasing from ₹309.67 lakhs to ₹512.64 lakhs.

•    Total assets of the company grew from ₹11,781.27 lakhs in March 2023 to ₹14,974.81 lakhs in March 2024, showing strong asset growth.

•    Net worth increased from ₹2,743.85 lakhs in March 2023 to ₹3,257.20 lakhs in March 2024, indicating a solid financial position and improved shareholder equity.

•    Despite the financial growth, total borrowings slightly decreased from ₹3,001.61 lakhs in March 2023 to ₹2,936.30 lakhs in March 2024, reflecting a slight reduction in debt levels.

Rajputana Industries is expanding its product portfolio by entering the cable manufacturing sector, catering to the construction industry and underwater cables for motors, utilizing excess capacity at its Sikar, Rajasthan facility. The upcoming IPO, a book built issue of ₹23.88 crores, is entirely a fresh issue of 62.85 lakh shares, with a price band set at ₹36 to ₹38 per share. The IPO is open for subscription from July 30, 2024, to August 1, 2024, with a tentative listing date of August 6, 2024. The company’s growth prospects are promising, supported by strategic expansions and a well-established market presence, positioning it favorably for future success.