Rolex Rings Ltd IPO

Rolex Rings Ltd IPO - SWOT Analysis

Strengths:

Rolex Rings is trusted by a range of customers with whom the company has established long term relationships. It has also created a strong customer base in India and abroad, including Ford, NBC Flexible Solutions, Timken, Automotive Axles Ltd and Woosu India. It exported to 17 countries in FY2020 that have had a positive impact on the company's earnings. At least 70% of its ten biggest customers in the industry have been buying from Rolex Rings for over a decade. Its product offering has applications in industrial infrastructure, renewable energy, railways and electrical vehicles.

Weaknesses:

The product offering of Rolex Rings is exceptionally niche. Its products can be used in various industries, but there is still room for improvement in terms of portfolio diversification. It also showed EBITDA margins of only 18.12% in FY21. The company’s heavy dependence on raw materials is concerning. Despite the positive response from the market and the fact that Rolex Rings is a leading forging company and a global supplier, experts have advised exercising caution before investing in this stock.

Opportunities:

Rolex Rings has shown strong earnings in the past few years, along with robust financials. This will allow the company flexibility in the expansion of its operations and an increase in its production capacity.

Threats:

Even though a significant source of revenue for Rolex Rings is from exports, this could change if there are changes in international trade policies. Its revenue from operations stood at Rs 6163.32 million in FY 2020-21, a decrease from Rs 9043 million in FY 2019. Its performance seems to have suffered. The company has also defaulted on the repayment of certain loans before and had requested a restructuring of its debt in FY13. Moreover, the raw materials used by Rolex Rings include alloy steel, carbon steel and stainless steel, all of which have witnessed price volatility in the past.