BSE & NSE
28 Jul - 30 Jul '21
₹880 - ₹900
Rolex Rings was incorporated in 2003. It manufactures engine components like pulleys and cam lobs; chassis components such as wheel hubs, output shafts, CVJ components, and similar components. Rolex Rings believes in following technological advancements avidly in order to create world-class products. According to the company, it creates designs using advanced software and tests its products for durability on cutting-edge equipment.
The Rolex Rings IPO was carried out to raize Rs 731 crore from primary markets. It consisted of Rs 56 crore in fresh issue and offer for sale of 75 lakh shares. It was fully subscribed within hours of opening and ultimately oversubscribed by 130 times.
The company leads in forging manufacturing and boasts a diverse clientele from different countries. According to analysts, Rolex Rings' issue price is reasonable in the light of its strong return ratios, and better ROEs due to better asset turnover.
Rolex Rings is also in the process of expanding the capacity of its solar projects, which will reduce the company’s carbon footprint. Moreover, the positive outlook for the automobile industry will also help improve the company's growth prospects.
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.
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.
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.
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.
You can apply for the Rolex Rings Ltd IPO in these ways:
Link your personal bank A/C to a trusted UPI ID and map it with your TradeSmart account. Now, proceed further to book your IPO. On acceptance of the mandate, the bid amount will get blocked in your bank account Learn more.
What were the company's earnings before tax more in the previous year?
Rolex Rings’ before tax profit in FY20-21 was pegged at Rs 752 crores.
What is the scope for scaling up the company’s business?
Rolex Rings is operating on a very low-margin business, so the scope for scaling up is little,
Does Rolex RIngs have high repeat customer usage?
It operates in the B2B space, which is why it has high repeat customer usage.
What is the founder and promoter shareholding?
The company's promoters will hold a 57.6% stake after its IPO.
How was the operating cash flow in the past three years?
Rolex Rings had positive cash flows from operating activities in the last three fiscals.
Can it operate without relying on external funding for the coming three years?
Yes. It does not have any expansion plans right now, so Rolex Rings should be able to operate without relying on external funding.