RR Kabel Receives SEBI Nod for IPO: Fresh Shares and Offer-for-Sale to Drive Public Offering

30 Aug 2023 , 08:03 AM

RR Kabel, a prominent player in the wires and cables manufacturing sector, has secured the green light from the Securities and Exchange Board of India (SEBI) to proceed with its plans for an Initial Public Offering (IPO). This offering is set to include a fresh issuance of shares amounting to Rs 225 crore by the company, in addition to an offer-for-sale (OFS) of 1.72 crore equity shares by both promoters and investor TPG.

The OFS component involves US-based private equity firm TPG Asia VII SF Pte Ltd, which will be divesting 1.29 crore equity shares. TPG Asia VII SF Pte Ltd currently holds a 20% stake, equivalent to 2.33 crore equity shares, in the consumer electrical company.

Having received an observation letter from SEBI on August 24, RR Kabel is now in a position to move forward with its IPO subscription process. This milestone signifies regulatory clearance for the IPO launch.

RR Kabel intends to allocate the net proceeds from the fresh issue towards debt repayment, targeting an amount of Rs 170 crore. The remaining funds will be channeled for general corporate purposes.

As a notable contender in the Indian consumer electrical industry, encompassing wires, cables, and fast-moving electrical goods, RR Kabel positions itself strongly. The industry, valued at Rs 1.61 lakh crore in FY22, is anticipated to achieve a compounded annual growth rate (CAGR) of 11% through FY27, reaching a market valuation of roughly Rs 2.66 lakh crore.

In the nine-month period culminating in December of FY23, RR Kabel reported a net profit of Rs 124.6 crore, reflecting a decline of 20.1% compared to the profit of Rs 156 crore in the corresponding period of the previous year. However, the company’s revenue from operations remained robust, experiencing a growth of 36.6% to reach Rs 4,083 crore during the same timeframe.

For the forthcoming IPO, Axis Capital, HSBC Securities and Capital Markets (India), Citigroup Global Markets India, and JM Financial have taken on the role of merchant bankers. This collaborative effort among financial experts underscores the company’s commitment to executing a successful and impactful IPO.