Rolex Rings shares list with gains; stock debuts at 39% premium to IPO price

Rolex Rings IPO was subscribed a massive 130 times by investors last month.
(Image: REUTERS)

Shares of Rolex Rings opened to trade at Rs 1,249 per share, up 39% or Rs 349 per share from the IPO price of Rs 900 per share. The IPO of the automotive components manufacturer was subscribed a massive 130 times by investors last month. Rolex Rings’ Rs 731 crore IPO was a mix of fresh issue of equity shares worth Rs 56 crore while the remaining Rs 675 crore was an offer for sale (OFS) by existing shareholders. On listing the company had a market capitalization of Rs 3,401 crore.

Rolex Rings IPO was subscribed 143.58 times by Qualified Institutional Buyers (QIB) while Non-Institutional Investors (NII) had bid for the issue a whopping 360 times. The retail investor quota was subscribed 24.49 times, translating to an overall subscription of 130.44 times. Post issue, the promoter shareholding has been trimmed to 57.64% now while the Public shareholding has risen to 42.36%. 

The company is one of the top five forging companies in India, according to ICICI Direct. The client base of Rolex Rings consists of leading global bearing manufacturers such as SKF, Timken, Schaeffler, NEI & NRB Bearings. Rolex Rings has reported profits for the last four financial years. In the previous fiscal year, the company reported a net profit of Rs 87 crore, up from Rs 53 crore in the financial year 2019-20. The concern surrounding the company stems from its default on loan payment in 2013. Post restructuring of the same debt, a significant portion of the promoter shareholding has been pledged and will remain so till at least March next year.

Analysts at ICICI Direct believe that the Rolex Rings IPO was priced at P/E of 28.2x (post issue) FY21. “A sticky clientele, increasing share of business amongst existing customers, improving operational efficiencies led by better utilisation and exit from CDR remain key catalyst for Rolex Rings,” the brokerage firm had said while pinning a ‘subscribe’ rating on the IPO. 

Meanwhile, Marwardi Financial Services had a ‘Subscribe with caution’ rating on the issue. “We assign “Subscribe (With Caution)” rating to this IPO as company is one of the leading forging manufacturers with geographically diversified revenue base and is available at reasonable valuation as compared to its peers. However, the client concentration risk and CDR debt restructuring in the past keeps us cautious at the same time from a longer-term perspective,” they said. 

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