Rolex Rings shares make a strong market debut

Rolex Rings shares make a strong market debut

Auto components maker Rolex Rings made its stock market debut on Monday with its shares listing at ₹1,250 per share on the NSE, surging nearly 39% premium over its issue price of ₹900 per share. On BSE, the stock was trading at ₹1,252 per share.

Rolex Rings initial public offer (IPO), that had opened for subscription on July 28 and closed on July 30, was subscribed 130.44 times on its final day of the bidding. The company’s price band was fixed at ₹880-900 per share.

The issue comprised a fresh issue of up to ₹56 crore and an offer for sale (OFS) of up to 75 lakh equity shares. Equirus Capital Private Limited, IDBI Capital Markets and Securities Limited, and JM Financial Limited were the managers of the offer.

The ₹731-crore IPO received bids for 74,16,00,096 shares against 56,85,556 shares on offer. The qualified institutional buyers (QIBs) category was subscribed 143.58 times, non-institutional investors 360.11 times, and retail individual investors (RIIs) 24.49 times. It had garnered around ₹219 crore from anchor investors ahead of its IPO.

Many brokerages had recommended Subscribe rating to the issue as the company is one of the leading forging manufacturers with a geographically diversified revenue base and is available at reasonable valuation as compared to its peers. Equirus Capital Private Limited, IDBI Capital Markets and Securities Limited, and JM Financial Limited were the managers of the offer.

Rolex Rings, based in Gujarat, is one of the top five forging companies in India in terms of installed capacity and a manufacturer and global supplier of hot rolled forged and machined bearing rings, and automotive components. It supplies bearing rings and automotive components to over 60 customers in 17 countries primarily located in India, USA, and Thailand and European countries.

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Rolex Rings listing misses estimates; what should investors do now?

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Rolex Rings shares debuted at a premium of 39 percent on August 9, missing analysts' expectations.

The stock opened at Rs 1,249 on the BSE and Rs 1,250 on the National Stock Exchange, rising 39 percent over the issue price of Rs 900 per share. It rallied up to Rs 1,264.95, up 40 percent. Analysts had expected it to debut with a 45-50 percent premium.

At the time of publishing this copy, it was trading at Rs 1,165.20, up 29.47 percent on the BSE. The combined trading volume was 95.68 lakh equity shares on the BSE and NSE.

Experts advised booking partial profits and holding the remaining allotted shares for the long term considering its strong relationships with customers, improving outlook of the automobile industry and robust forging capabilities.

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“We recommend allotted investors to book 50 percent of profits on listing day and holding the rest for mid and long term horizon. If non-allotted investors wish to buy on a listing day it is better to wait and watch to accumulate at a better pricing range in the near future,” Prashanth Tapse, VP Research at Mehta Equities told Moneycontrol.

Astha Jain, Research Analyst at Hem Securities, also recommended that investors who had received allotment & had put in money for listing gain perspective can book profit on listing day while those with long term horizon can book some profit & keep remaining allotment.

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“The company is one of the top five forging companies in India in terms of installed capacity. It serves 60 customers across 17 countries that constitutes around 80 percent of the total market. The company has a strong & sticky clientele & is in the process of expanding capacity of its solar projects by an installed capacity of 16 MW, the proposed expansion will help in reducing company’s carbon footprint and expanding its profit margins,” she reasoned for long term holding.

With three manufacturing units in Rajkot, the company has 22 forging lines with a combined installed capacity of 1,44,750 MTPA (million tonnes per annum), machining facilities consisting of 528 spindles with a combined installed capacity of 69 million parts per annum, and other machinery including heat treatment furnaces, cold rolling machines and other infrastructure.

Its customers are leading bearing manufacturers, and also a Tier-I supplier to global auto companies.

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It has reported strong financial performance in the last three financial years ended March 2021, with attractive return ratios driven by margins. It reduced debt by 50 percent (around Rs 247 crore) due to strong free cash flow generation during FY18-FY20.

“The company’s strong relationships with leading original equipment manufacturers (OEMs), improving outlook of automobile industry and robust forging capabilities would help in improving growth prospects of the firm in the near future. Therefore, investors can consider holding this for medium to long term,” said Likhita Chepa, Senior Research Analyst at CapitalVia Global Research.

Rolex Rings raised Rs 731 crore from investors, through its IPO that comprised a fresh issue of Rs 56 crore and the rest Rs 675 crore by selling shareholders.

The company is planning to use the proceeds from the fresh issue to fulfil their long-term working capital requirements as well as general corporate purposes.

The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Rolex Rings shares list with 39% premium

Shares of auto components maker Rolex Rings Ltd on Monday listed on the bourses with a premium of nearly 39 per cent against the issue price of Rs 900.

The stock listed at Rs 1,249, registering a jump of 38.77 per cent from its issue price on the BSE. It later zoomed 40.55 per cent to Rs 1,264.95.

At the NSE, it made its debut at Rs 1,250, reflecting a jump of 38.88 per cent.

The company’s market valuation was at Rs 3,090.98 crore on the BSE.

Mirroring massive investor response, Rolex Rings initial public offer was subscribed 130.44 times last month.

The Rs 731-crore offer was in a price range of Rs 880-900 a share.

Based in Rajkot, Gujarat, Rolex Rings is among the leading manufacturers of forged and machined components in the country.