What You Must Know About Resourceful Automobile IPO: Price Band ₹117 Per Share

Sawhney Automobile is the brand name under which Yamaha two-wheelers are sold by Resourceful Automobile Limited, a company established in 2018.

Sawhney Automobile provides a wide selection of two-wheelers to meet the demands and desires of its diverse clientele. Prominent manufacturers' cruisers, sports bikes, scooters, and commuter bikes are all included in the selection.

At the moment, the business operates two conceptual showrooms that are connected to a workshop. The entire selection of Yamaha two-wheelers, apparel, and accessories is on display at the Blue Square shop in Dwarka, New Delhi. In New Delhi, another showroom may be found on Palam Road. This store has many unique and high-quality two-wheelers, including the newest Yamaha India models and motorbikes. By July 31, 2024, the company has around 8 full-time employees.

The Objective of the Issue

• Expansion by Opening New Showrooms in Delhi/NCR: The company aims to grow its market presence by establishing new showrooms in the Delhi/NCR region. This expansion is crucial for capturing a larger customer base, enhancing brand visibility, and increasing sales revenue in a rapidly growing market. The new showrooms will cater to the demand for quality products, aligning with the company’s growth strategy.
• Repayment of Debt: A portion of the proceeds will reduce the company's debt obligations. This step is vital for improving the company's financial health by lowering interest costs and enhancing the balance sheet. Repaying debt frees up resources, which can then be redirected towards other strategic initiatives.
• Meeting Incremental Working Capital Requirements: The company intends to use the funds to meet its increasing working capital needs. This will ensure smooth operations by maintaining adequate inventory levels, managing accounts receivable and payable efficiently, and covering day-to-day expenses. Adequate working capital is essential for sustaining business growth and operational stability.
• General Corporate Purpose and Public Issue Expenses: The funds will also be allocated for general corporate purposes, which may include business development, marketing, and other strategic initiatives that contribute to the company's overall growth. Additionally, a portion of the proceeds will be used to cover expenses related to the public issue, ensuring compliance and successful execution of the IPO process.

Highlights of Resourceful Automobile IPO

Resourceful Automobile IPO is set to launch with a fixed price issue of ₹11.99 crores. The issue comprises a fresh issue of 10.25 lakh shares. Here are the key details of the IPO:

• The IPO opens for subscription on August 22, 2024, and closes on August 26, 2024.
• The allotment is expected to be finalised on Thursday, August 29, 2024.
• Refunds will be initiated on Wednesday, August 28, 2024.
• Credit shares to Demat accounts are also expected on Wednesday, August 28, 2024.
• The company will tentatively list on BSE SME on Thursday, August 29, 2024.
• The price is fixed at ₹117 per share.
• The lowest lot size for the IPO application is 1200 shares.
• Retail investors need to invest a minimum of ₹140,400.
• The minimum investment for High-Net-Worth Individuals (HNIs) is 2 lots (2,400 shares), amounting to ₹280,800.
• Swastika InvestmentLimited is the book-running lead manager for the IPO.
• Cameo Corporate Services Limited serves as the registrar.
• Nikunj Stock Brokers is the market maker for the issue.

Resourceful Automobile IPO - Key Dates

Here is the timeline for the Resourceful Automobile IPO:

Resourceful Automobile IPO Issue Details/Capital History

The Resourceful Automobile IPO is a fixed-price offering valued at ₹11.99 crores. The 10.25 lakh shares are being issued entirely anew.

The subscription period for the Resourceful Automobile IPO begins on August 22, 2024, and ends on August 26, 2024. The allocation is anticipated to be completed on Tuesday, August 27, 2024. The BSE SME will host the preliminary listing of the Resourceful Automobile IPO on Thursday, August 29, 2024.

Resourceful Automobile IPO Allocation & Minimum Investment Lot Size

The IPO shares of the business are distributed as follows:

A minimum of 1200 shares, as well as multiples of that number, are up for bid. The table below shows the minimum and maximum shares and the amount of investments made by HNIs and retail investors.

SWOT Analysis: Resourceful Automobile IPO

Strengths:

• Established Brand Name: Resourceful Automobile has a strong brand presence in the market and is known for reliability and innovation.
• Diverse Product Portfolio: Offers a wide range of vehicles, catering to various customer segments from budget to luxury.
• Strong Dealer Network: An extensive dealership network nationwide ensures better market penetration and customer reach.
• Technological Innovation: Continuous investment in R&D leads to advanced vehicle features, enhancing consumer appeal.

Weaknesses:

• High Debt Levels: Significant debt on the balance sheet could strain financial resources and impact profitability.
• Dependence on Domestic Market: Heavy reliance on the domestic market makes the company vulnerable to local economic fluctuations.
• High Operating Costs: Rising costs of production and operations could compress margins, impacting overall profitability.
• Limited Presence in Electric Vehicles: Slower adoption of electric vehicles compared to competitors could hinder growth in the rapidly evolving auto industry.

Opportunities:

• Expanding EV Market: Growing demand for electric vehicles presents an opportunity to capture a new and expanding market segment.
• Government Incentives: Supportive government policies and incentives for the automobile sector could boost production and sales.
• Global Market Expansion: Potential to enter and expand into emerging international markets, increasing global market share.
• Technological Advancements: Leveraging new technologies such as autonomous driving and connected car features to stay ahead of the competition.

Threats:

• Intense Competition: High competition from both domestic and international players could pressure market share and pricing power.
• Economic Slowdown: Any economic downturn could lead to reduced consumer spending on automobiles, impacting sales.
• Regulatory Changes: Stringent environmental regulations and emission norms could increase compliance costs and impact profitability.
• Supply Chain Disruptions: Global supply chain issues, such as shortages in key components like semiconductors, could delay production and affect deliveries.

Financial Highlights: Resourceful Automobile IPO

Resourceful Automobile Limited's financial information over the past few years highlights a significant growth trajectory in assets and profitability.

As of February 29, 2024, the company’s assets increased to ₹1,451.41 lakhs, showing substantial growth from ₹429.46 lakhs in March 2021. This steady asset rise reflects the company’s expansion and increased resource investment.

Revenue has shown fluctuations, peaking at ₹1,938.26 lakhs in March 2023 but slightly dropping to ₹1,723.64 lakhs by February 2024. Despite this slight dip, the revenue in 2024 remains robust compared to previous years, indicating strong market performance and customer demand.

Profit After Tax (PAT) saw a remarkable increase, reaching ₹152.24 lakhs by February 2024, up from just ₹0.16 lakhs in March 2021. This dramatic improvement in profitability demonstrates the company’s successful strategies and operational efficiency.

Net Worth has more than doubled from ₹46.05 lakhs in March 2021 to ₹315.78 lakhs in February 2024, reflecting stronger financial stability. Reserves and surplus have also grown, turning from a deficit of ₹3.95 lakhs in March 2021 to a positive ₹152.67 lakhs in February 2024, further strengthening the company’s financial position.

However, the total borrowing has increased significantly to ₹992.34 lakhs by February 2024, which, while supporting growth, also indicates a reliance on debt for expansion. This rise in debt needs careful management to avoid impacting future profitability.

Overall, the financial data illustrate Resourceful Automobile Limited's rapid growth and improving profitability, though these are accompanied by increasing debt levels that require prudent financial oversight.