Ratnaveer Precision Engineering’s expansion plans and IPO success

Recently listed IPO named Ratnaveer Precision Engineering Ltd is about to increase its capacity by 23,000 MTPA by June 2024. The company is engaged in the manufacturing and selling of a diverse range of stainless steel products. The Company manufactures stainless steel washers, solar mounting hooks, finishing sheets, and SS tubes & pipes products, which find applications in elevators, doors, and home appliances. The company produces 2,500+ washers in different sizes and international standards. RPEL has a diversified presence across various segments, including the Navy, aeronautical, electro-machines, motors, windmills, automobiles, and the railway industry.

In FY23, the company’s geographical revenue split was 80% from domestic sales and 20% from exports to countries including Germany, the UK, Spain, the Netherlands, and others. As of June 23, the company had a healthy order book of Rs 127 crore to be executed over the next five months. The manufacturing facilities are located at Vadodara and Ahmedabad with an installed capacity of 26,000 MTPA, which was utilized around 84% during the last three years ending on March 31, 2023.

RPEL now has a capacity addition plan of 23,000 MTPA. As per the company filing, the existing capacity for manufacturing is 26,000 MTPA, and the capacity utilization was 19,030 MTPA. The company sets a deadline to complete this capacity addition by June 2024. The finance required for such expansion is to be raised by way of a term loan from a bank or financial institution with the combination of internal accruals. The required amount is around 45.94 crores for the new product launch. The company wants to enter into a new line of product manufacturing.

The new products that the company is going to introduce are Disc Lock Washer, Circlip, Nut, Bolt, and Finishing line. These all products come under the family of Stainless-Steel Finished Products, which will cater to both domestic and international markets. The product launch date is announced by the company, which is on July 1st, 2024. The beneficial territories are India, the USA, Europe, Middle East, and South Asia.

The IPO of RPEL opened at Rs 123.20 per share, reflecting a 25.7% increase over the issue price, while on the BSE, it was listed at Rs 128 per share. The IPO price band was fixed in the range between Rs 93 to Rs 98 per equity share with a face value of Rs 10 each, and the lot size is 150 equity shares. From the listing price of Rs. 123, the share is trading approximately 5% lower and 15% higher from the listing price bands. The following chart shows the stock price movement of RPEL since the day of listing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.