Ratnaveer Precision Engineering IPO subscribed 94x

• Non-institutional investors and QIBs bid aggressively for the issue with each of them subscribing it by 130x.
• The company is a stainless steel product manufacturer focused on finished sheets, washers, pipes, tubes and more.
• Net proceeds from the issue will be used to fund working capital requirements and general corporate purposes.

The ₹165 crore initial public offer (IPO) of Ratnaveer Precision Engineering was subscribed almost 94 times the shares on offer, as on the last day of the issue.

Non-institutional investors and qualified institutional buyers (QIBs) subscribed to the issue by over 130 times each while the retail investor portion was subscribed by 53.96 times.

The issue is a combination of fresh issue of 13,800,000 shares and offer-for-sale (OFS) of 3,040,000 shares, where the seller is the promoter Vijay Ramanlal Sanghavi.

The net proceeds from the fresh issue will be used towards funding working capital requirements of the company, and towards general corporate purposes.

Unistone Capital is the book running lead manager of the issue and Link Inktime is the registrar of the issue.

Source: BSE

About the company

Ratnaveer Precision Engineering is a stainless steel product manufacturer focused on producing finished sheets, washers, solar roofing hooks, pipes and tubes.

It has four manufacturing units, out of which two units are located at GIDC, Savli, Vadodara, Gujarat, one at Waghodia, Vadodara, Gujarat and the other one is located at GIDC, Vatva, Ahmedabad, Gujarat.

Its products find application across industries like automotive, solar power, wind energy, power plants, oil & gas, pharmaceuticals, sanitary & plumbing, instrumentation, electro mechanics, architecture, building & construction, electrical appliances, transportation, kitchen appliances, chimney liners, etc.

Its products are used in both the commercial and residential sectors and are sold within India and overseas. Some of the listed peers are M M Forgings, Menon Bearings and Venus Pipes & Tubes.

Financials & Risk factors

The company’s total income has been growing gradually in the last three years, but its net profit has grown 2.7 times in FY23 as compared to the year before.

Lack of long-term agreements with suppliers, price volatility in the steel sector; in addition to the high-volume-low-margin and the working capital intensive nature of the business have been listed at business risks of the company, in the RHP.

All its production units are located in one geographic area and therefore, any localized social unrest or natural disaster can affect its business and financial condition. It also operates in a highly competitive and fragmented industry with low barriers to entry.

It has experienced negative cash flows in relation to its operating, investing and financing activities in the last three financial years.

They have entered into related party transactions in the past and may continue to do so in the future. Its promoter has provided personal guarantee for loans availed by the company, and any default can adversely affect the promoter’s ability to manage the affairs.

A major portion of its public shareholding is held by shareholders who are extended family members of the promoter. “After the successful completion of the offer, these shareholders shall have the ability to influence the outcome of matters that are submitted to public shareholders for their approval,” the company said in its RHP.