RR Kabel set for Dalal Street debut, grey market signals mild listing pop

RR Kabel, a prominent player in the Indian consumer electrical industry, is poised to make its debut on Dalal Street on Wednesday, September 20. The company's shares were commanding a premium of Rs 95-100 ($1 = Rs 83.05) in the grey market a day before its listing, indicating a potential listing pop of up to 10 percent over its issue price. This is despite a drop in the unofficial market premium from around Rs 300-310 at the announcement of the issue to Rs 250 per share when the issue opened.

The company, incorporated in 1995, specializes in wires and cables (W&C) and fast-moving electrical goods (FMEG) for residential, commercial, industrial, and infrastructure purposes. The forthcoming listing will make RR Kabel the first entity in the Indian stock markets to make a T+2 listing, which refers to listing after two working days from the closure of the issue.

The primary offering of RR Kabel was open for bidding between September 13-15 and aimed to raise a total of Rs 1,964 crore (Rs 1 crore = $120,409) via the IPO route. The company sold its shares in the fixed price band of Rs 983-1,035 apiece and investors could make a bid of a minimum of 14 shares and its multiples thereafter.

The IPO was overall subscribed 18.69 times. The portion for qualified institutional bidders (QIBs) was subscribed 52.26 times, while the allocation for non-institutional investors fetched 13.23 times bids. The reservation for retail investors was booked 2.13 times.

Analysts tracking the grey market noted that recent volatility in the listed markets and aggressive pricing of the issue could impact RR Kabel's listing prospects. However, others remain positive about the company's longer-term outlook.

"We expect a decent listing for RR Kabel and shares may open at a premium of around 15 percent to the issue price of Rs. 1,035 per share when it lists on the bourses," said Dhruv Mudaraddi, Research Analyst at StoxBox. "We remain positive on the company and advise investors who have received allotment to hold their shares from a medium to long term perspective."

RR Kabel is the fifth largest player in the wires and cable market and has potential to increase its market share, according to Mahesh M Ojha, AVP - Research at Hensex Securities. The company's diverse product suite, extensive domestic and global distribution network, strong financials, and scaled B2C business in the wires and cable industry position it well for future growth.

The IPO comprised a fresh issue of equity shares worth ₹180 crore and an offer for sale (OFS) of 1.72 crore equity shares worth ₹1,784 crore by the promoters and investors. In the OFS, TPG Asia VII SF Pte Ltd offloaded 1.29 crore equity shares, while public shareholder Ram Ratna Wires sold its entire shareholding of 1.364 million shares. Other selling shareholders included promoters Mahendrakumar Kabra, Hemant Kabra, Sumeet Kabra and Kabel Buildcon Solutions, part of the promoter group.

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