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Rex Pipes NSE SME IPO review (May apply)

Review By Dilip Davda on July 24, 2021

•    RPCIL is engaged in the manufacturing and marketing of flexible pipes and related accessories.
•    The company is also doing bus body building jobs.
•    It has posted inconsistency in financial performance with super results in a pre-IPO year.
•    The issue appears fully priced based on the financial data.

The company filed its first draft offer documents with the regulator in April 2018, which was later on withdrawn.  Thereafter, it refiled a fresh set of draft offer documents in June 2021. Surprisingly this information was not available on the website of the Lead Manager (LM). Even as of July 24, 2021, at 10.20 am, LM's website had no draft offer documents or the final prospectus uploaded, this is really shocking. However, after checking with them, the information given is that draft documents uploading is voluntary and the final document upload is to be done just three days before the opening of the IPO.

As per general practice followed, once the statutory IPO ad gets released in the dailies, relevant information and documents are available on the concerned platform on the same day or latest by the following day. In this case, the IPO ad was released on July 22, 2021, and till 10.40 am of July 24, 2021, no information was traceable on any concerned platform. This indicates something is wrong somewhere.

Since the last IPO of Focus Business Solutions, Annexure A is missing in offer documents on track records of the Lead Manager.

Rex Pipes and Cables Industries Ltd. (RPCIL) is engaged in the Trading and production/Manufacturing product range encompassing uPVC pipes, HDPE pipe, Cables, fittings and an abundance of accessories under the brand name 'REX'. The brand 'REX' is the hallmark of showcasing the entire product range. It has just taken a little over two decades for The Rex Group of Industries to emerge as one of India's leading manufacturers in the field of PVC Pipes & Fittings and PVC insulated electrical wires.

The company produces excellent Three Core flat cables, Single Core Flexible Home wire, Poly Wrapped Winding wire along with UPVC, HDPE and sprinklers with unique skills, continuous technological upgrading machines, professional management testing and persistent dedication without compromising on quality.

RPCIL has emerged as a national entity as a complete innovation for its own type of manufactured products. It offers a wide range of PVC pipes, HDPE pipes, Cables classified in a systematic manner to ensure easy and accurate selection, with the simultaneous advantage of providing the most cost-effective solutions for customers. RPCIL has established itself as an innovative leader and quality manufacturer by continuously upgrading its technology, modernizing manufacturing facilities and maintaining the highest standards of quality and services.

Under the engineering division, RPCIL is also doing bus bodybuilding activities. The Rex Coaches, a 'Power House of Bus Body Design' and driven by a 'Passion for Innovation' with Mass manufacturing capabilities catering to the various Indian OEMs, STUs, Fleet Operators and Educational Institutions.

To part finance its working capital requirements (Rs. 4.50 cr.) and general corpus fund needs (Rs. 1.44 cr.), RPCIL is coming out with a maiden IPO of 2400000 equity shares of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 6.24 cr. The issue opens for subscription on July 28, 2021, and will close on August 02, 2021. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the NSE SME Emerge platform. Issue constitutes 27.91% of the post issue paid-up equity capital of the company. RPCIL will spend around Rs. 0.30 cr. for this IPO process.

The issue is solely lead managed by Navigant Corporate Advisors Ltd., and KFin Technologies Pvt. Ltd. is the registrar to the issue.  New Berry Capitals Pvt. Ltd. is the market maker for this issue.

RPCIL has so far issued entire equity at par and has also issued bonus shares in the ratio of 3 for 2 in January 2018. The average cost of acquisition of shares by the promoters is Rs. 5.28 and Rs. 6.69 per share.

Post issue, company's current paid-up equity capital of Rs. 6.20 cr. will stand enhanced to Rs. 8.60 cr. Based on the issue price, RPCIL is looking for a market cap of Rs. 22.36 cr.

On the financial performance front, RPCIL has posted turnover/net profits of Rs. 35.16 cr. / Rs. 1.27 cr. (FY18), Rs. 37.75 cr. / Rs. 1.31 cr. (FY19) and Rs. 32.07 cr. / Rs. 0.77 cr. (FY20). For the first ten months of FY21, it has reported a net profit of Rs. 1.01 cr. on a turnover of Rs. 44.39 cr. For FY20, it suffered a setback. Higher top and bottom lines for the pre-IPO period raise concern.

For the last three fiscals, the company has posted an average EPS of 1.67 and an average RoNW of 10.8%. The issue is priced at a P/BV of 1.41 based on its NAV of Rs. 18.42 as of January 31, 2021, and at a P/BV of 1.27 based on its post-issue NAV of Rs. 20.54.

If we consider FY21 earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of around 18.43 thus making it a fully priced offer.

As per the offer documents filed, RPCIL has shown Finolex Cables and Birla Cables as its listed peers. They are currently trading at a P/E of 28.49 and 39.78 (as of July 23, 2021). However, they are not truly comparable on an apple to apple basis.

The company has not paid any dividends since its inception. However, it will follow a prudent dividend policy based on its financial performance and future prospects.

The offer document is missing 'Annexure-A' that relates to the lead manager's (LM's) track record (refer to page 214 of the offer document).

This is the 20th mandate from its stable in the last five fiscals including the ongoing one. Out of the last 10 listings, 1 opened at discount, 2 at par and the rest with premiums ranging from 0.125% to 54.47% on the day of listing. (as per track record docs on LM's website)

Conclusion / Investment Strategy

The company has posted inconsistencies in its top and bottom lines. Super earnings in pre-IPO year raise concern. Based on its latest financial data, the issue is fully priced. Risk savvy investors may consider investment for the long term.

Review By Dilip Davda on July 24, 2021

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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

Rex Pipes and Cables IPO FAQs

  1. 1. Why Rex Pipes and Cables IPO?

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

  2. 2. How is Rex Pipes and Cables IPO?

    Read the Rex Pipes and Cables IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Rex Pipes and Cables IPO what should investors do?

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

  4. 4. Is Rex Pipes and Cables IPO good?

    Our recommendation for Rex Pipes and Cables IPO is to subscribe for long term.

  5. 5. Is Rex Pipes and Cables IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Rex Pipes and Cables IPO.

  6. 6. When will Rex Pipes and Cables IPO allotment status?

    The Rex Pipes and Cables IPO allotment status will be available on or around August 5, 2021. The allotted shares will be credited in demat account by August 9, 2021. Visit Rex Pipes and Cables IPO allotment status to check.

  7. 7. When will Rex Pipes and Cables IPO list?

    The Rex Pipes and Cables IPO will list on Tuesday, August 10, 2021, at NSE SME.


1. Sneha Shettigar     Link|July 27, 2021 8:20:59 PM
What will be the lock-in period after the allotment for Rex pipes?