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RCI Industries & Technologies Ltd IPO Review (Avoid)

Review By Dilip Davda on Dec 30, 2013

While primary market remained near dormant for the year calendar year 2013 except Just Dial main line IPO and PGCIL FPO, it just turned out to be the year of SME IPOs. We have two SME IPOs opening in the last week of December 2013. One of them is RCIITL. Details of the same are as under:

 

RCI Industries and Technologies Ltd. (RCIITL) is a diversified turnover conglomerate and are committed towards high quality products & credit with several innovations over last twenty one years. In past few years the company has consolidated its position through successful forays into diversified sectors like trading of all types of ferrous and Non ferrous Metals such as Copper Wires, ingot, scrap, power cables and other related items used in various electrical and industrial applications. Company also exports Indian Handicrafts especially metal based. RCIITL operates as an important intermediary in the Metals Supply Chain whereby it import/purchase materials such as Annealed/Un-Annealed Copper Wires, Bunched Copper Wires, Aluminium Wires etc. from various suppliers and supply the same to customers in the Metal Business. It offers a diversified product range which includes variety of grades, thickness, widths and standards, in of all types of ferrous and Non ferrous Metals according to customer specifications.

 

RCIITL is thus engaged in the sphere of offering and exporting Copper Wires which include Annealed Copper Wire, Bunched Copper Wire Ropes and Copper Ingots, which are used in different electrical and industrial applications.

 

To finance its general capital requirements and corpus fund the company is offering 2880000 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 11.52 crore. . The issue opens for subscription on 30.12.13 and will close on 06.01.14. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Sarthi Capital Advisors Private Limited is the lead manager to the issue and RCMC Share Registry Private Limited is the registrar. Shares will be listed on BSE SME. Post this issue its existing equity capital of Rs. 8.02 crore will rise to Rs. 10.90 crore. Between 1997 to 2013 it issued equity shares at a price of Rs. 40 to Rs. 70 per share and has capitalized reserves with bonus issues in December 1999 (2 for 1). 

 

On performance front inconsistency is marked in company’s financial performance. The company has posted an average EPs of Rs. 1.74 for last three fiscals and for Q1 of current fiscal it has earned net profit of Rs.0.36 crore on a turnover of Rs. 100.27 crore. If we attribute these earnings on annualized basis on expanded equity of Rs. 10.90 crore after this issue, the asking price is at a P/E of 30.5 plus making it an expensive offer.

 

This is the fourth SME issue from the lead manager that has mixed track record.


Conclusion / Investment Strategy

Avoid this pricy IPO which also has entry barrier.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 30, 2013

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

RCI Industries IPO FAQs

  1. 1. Why RCI Industries IPO?

    The initial public offer (IPO) of RCI Industries & Technologies Ltd offers an early investment opportunity in RCI Industries & Technologies Ltd. A stock market investor can buy RCI Industries IPO shares by applying in IPO before RCI Industries & Technologies Ltd shares get listed at the stock exchanges. An investor could invest in RCI Industries IPO for short term listing gain or a long term.

  2. 2. How is RCI Industries IPO?

    Read the RCI Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. RCI Industries IPO what should investors do?

    RCI Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the RCI Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is RCI Industries IPO good?

    Our recommendation for RCI Industries IPO is to avoid.

  5. 5. Is RCI Industries IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the RCI Industries IPO.

  6. 6. When will RCI Industries IPO allotment status?

    The RCI Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit RCI Industries IPO allotment status to check.

  7. 7. When will RCI Industries IPO list?

    The RCI Industries IPO will list on Tuesday, January 21, 2014, at BSE SME.