RR Kabel IPO Likely to List with 10-15% Premium
The stock of RR Kabel is likely to list with a 10-15% premium over the issue price of Rs 1,035 on September 20, based on the following factors:
- Impressive response to public issue:The RR Kabel IPO was subscribed 18.69 times during September 13-15, with major support from qualified institutional investors, high net-worth individuals, and retail investors.
- Positive sentiment in equity market:The Indian equity market has been on a bullish run in recent months, with the Nifty50 index hitting a record high on September 16, 2023. This positive sentiment is expected to support the listing of RR Kabel.
- Strong fundamentals: RR Kabel is a leading player in the wires and cables industry in India. The company has a strong track record of growth and profitability. It also has a healthy balance sheet.
However, the following factors may limit the upside for the stock:
- Subdued financials: RR Kabel’s net profit declined by 11.2% in FY23, due to higher input costs and other expenses.
- High OFS portion: The OFS portion in the RR Kabel IPO was 90%. This means that a large portion of the shares sold in the IPO were by existing shareholders. This may limit the upside for the stock in the short term.
Overall, the outlook for the RR Kabel IPO listing is positive. However, investors should be aware of the subdued financials and the high OFS portion before investing.
Additional Factors to Consider
- Sector outlook: The wires and cables industry is expected to grow at a healthy pace in the coming years, driven by factors such as increasing urbanization, rising disposable incomes, and growing infrastructure investments. This will benefit RR Kabel.
- Competition: RR Kabel faces competition from other established players in the wires and cables industry, such as Havells India, Polycab India, and Finolex Cables. Investors should assess RR Kabel’s competitive strengths and weaknesses before investing.
- Management track record: RR Kabel has a management team with a strong track record. Investors should assess the management’s vision and strategy for the company before investing.
Recommendation
Investors should carefully consider the risks and rewards involved before investing in RR Kabel. While the overall outlook for the listing is positive, investors should be aware of the subdued financials, the high OFS portion, and the competitive landscape. Investors should also assess the company’s management team and strategy before investing.
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