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RMC Switchgears BSE SME IPO review (Apply)

Review By Dilip Davda on Feb 21, 2017

RMC Switchgears Ltd (RMC) (Formerly known as RFH Metal Castings Private Limited) is one of the largest manufactures for electrical enclosures with manufacturing facilities spread over an area of 8 Lac Sq ft the, only company manufacturing all types of enclosures in Sheet Molded Compound, Deep Drawn, Fabricated and Polycarbonate under one roof. RMC has all the ultra modern automatic machineries from USA, Japan, Germany and Korea to achieve the best quality and uniformity. The company is the approved vendors for all the state electricity utilities and has been receiving orders from them on regular basis. RMC is also approved vendors for the large corporates of India viz. Tatas, L& T, NCC, KEI, IRCON, Drake & Scull etc. It has its own R & D facility with required equipments that helps it to modify the product within small time frame. As claimed by the management, the company has all three types of manufacturing facilities viz. SMC, Polycarbonate and metal under one roof giving it an edge over competitors who have one type of facility only either in metal or SMC or plastic.

For its working capital requirement, general corpus fund and listing of the shares, the company is coming out with a maiden IPO of 1536000 equity shares of Rs. 10 each at a fixed price of Rs. 27 per share to mobilize Rs. 4.15 crore. Issue consists of fresh equity issue of 768000 shares and offer for sale of the same quantity. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue opens for subscription on 28.02.17 and will close on 03.03.17. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Hem Securities Ltd and Link Intime India Pvt Ltd is the registrar to the issue. After initial equity on incorporation till 2002 at par, it issued fresh equity during 2008 to 2014 at a price ranging from Rs. 85 to Rs. 500 per share. It has also issued bonus in the ratio of 3 for 1 in June 2016. As the IPO consists of offer for sale as well as a fresh equity issue on 50:50 basis, its current paid up equity capital of Rs. 4.32 crore will stand enhanced to Rs. 5.09 crore post issue.

On performance front, for last three fiscals it has posted turnover/net profits of Rs. 40.87 cr. / Rs. 0.20 cr. (FY14), Rs. 45.74 cr. / Rs. 0.24 cr. (FY15) and Rs. 55.85 cr. / Rs. 0.79 cr. (FY16). For the first six months of the current fiscal it has earned net profit of Rs. 0.86 crore on a turnover of Rs. 26.10 crore. If we annualize these earnings and attribute it on the equity capital then asking price is at a P/E of around 8 plus against industry composite P/E of 22 plus and the peers trading above 16 plus. .

Considering major spending planned for power sector, this company is set for better prospects going forward.

On merchant banker’s front, this is the 29th mandate from its stable and past mandates have shown mixed trends.

Conclusion: Issue pricing appears reasonable. Cash surplus investors may consider investment for medium to long term rewards.


Conclusion / Investment Strategy

Issue pricing appears reasonable. Cash surplus investors may consider investment for medium to long term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Feb 21, 2017

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

RMC Switchgears IPO FAQs

  1. 1. Why RMC Switchgears IPO?

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

  2. 2. How is RMC Switchgears IPO?

    Read the RMC Switchgears IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. RMC Switchgears IPO what should investors do?

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

  4. 4. Is RMC Switchgears IPO good?

    Our recommendation for RMC Switchgears IPO is to subscribe.

  5. 5. Is RMC Switchgears IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the RMC Switchgears IPO.

  6. 6. When will RMC Switchgears IPO allotment status?

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

  7. 7. When will RMC Switchgears IPO list?

    The RMC Switchgears IPO will list on Tuesday, March 14, 2017, at BSE SME.