Rishabh Instruments Limited’s Initial Public Offering to open on Wednesday, August 30, 2023, sets price band at ₹418 to ₹441 per Equity Share

 

Rishabh Instruments Limited’s Initial Public Offering to open on Wednesday, August 30, 2023, sets price band at ₹418 to ₹441 per Equity Share

 

·         Price Band of ₹418 – ₹441 per equity share bearing face value of ₹10 each (“Equity Shares”)

·         Bid/Offer Opening Date – Wednesday, August 30, 2023 and Bid/Offer Closing Date – Friday, September 01, 2023.

·         Minimum Bid Lot is 34 Equity Shares and in multiples of 34 Equity Shares thereafter.

·         The Floor Price is 41.8 times the face value of the Equity Share and the Cap Price is 44.1 times the face value of the Equity Share.

 

Risks to Investors

1. Concentration risk: We are dependent on our Poland Manufacturing Facility II and in Fiscals 2023, 2022 and 2021, it manufactured 62.73%, 58.25% and 59.18%, respectively, of the total products with a capacity utilisation of 73.70%, 64.81% and 66.95%.

2. Our business is dependent on our Manufacturing Facilities. In Fiscals 2023, 2022 and 2021, our Nashik Manufacturing Facility I manufactured 17.45%, 19.67% and 14.30% and our Poland Manufacturing Facility II manufactured 62.73%, 58.25% and 59.18%, respectively, of the total products.

3. We propose to utilise₹ 628.86 million of the Net Proceeds of the Offer towards Expansion of Nashik Manufacturing Facility I and we have not entered into any definitive arrangements to utilise certain portions of the Net Proceeds of the Offer.

4. Customer concentration risk: In Fiscals 2023, 2022 and 2021, revenue from our top 10 customers were ₹1,817.91 million, ₹1,128.04 million and ₹1,030.39 million, respectively, representing 31.92%, 23.99% and 26.42%, respectively, of our total revenue from operations.

5. Product Liability: We may lose our customers and may be subject to product liability claims or claims alleging deficiency in service. One of our customers, in April 2022, issued a legal notice to our Company for alleged failure to adhere to their quality standard and technical hurdles faced in relation to the certain products supplied by our Company and have thereafter, ended their association/ relationship with us.

6. We are yet to capitalise on the development of the American National Standards Institute current transformers in the United States and/or acquire new customers in the United States pursuant to such product development.

7. Dependence on Subsidiaries: Our Subsidiaries contributed ₹3,995.57 million, ₹3,391.27 million and ₹2,793.55 million representing 67.09%, 72.12% and 71.64% of our total revenue from operations in Fiscals 2023, 2022 and 2021, respectively.

8. Dependence on semiconductors availability: We source microcontroller semiconductor chips as an input for our manufacturing operations. Shortages in the supply of semiconductors have had, and may continue to have, a material adverse effect on the industry and on our results of operations and financial condition.

9. The three BRLMs associated with the Offer have handled 20 public issues in the past three years, out of which 7 issues closed below the IPO price on listing date.

 

Name of the BRLMs	Total public issue	Issues closed below IPO price on listing date
DAM Capital Advisors Limited*	12	4
Mirae Asset Capital Markets (India) Private Limited*	NIL	NIL
Motilal Oswal Investment Advisors Limited*	7	2
Common issues handled by the BRLMs	1	1
Total	20	7

*Issues handled where there were no common BRLMs

10. The Offer Price, our Market Capitalization to Revenue, Market Capitalization to Earnings and Enterprise value to EBITDA of our Company and return on net worth may not be indicative of the market price of the Equity Shares on listing or thereafter.

 

Market Capitalization to revenue from operations (Fiscal 2023) multiple at the Cap Price (number of times)	Price to Earnings Ratio (based on Fiscal 2023 diluted EPS) at the Cap Price (number of times)	Nifty Fifty P/E ratio*	Weighted average return on networth for the last three financial years (%)
2.94	34.56	22.39	12.36

*As on August 17, 2023

Particulars (for Fiscal 2023)	Ratio vis-à-visFloor Priceof ₹ 418	Ratio vis-à-visCap Priceof ₹ 441
	(In multiples, unless otherwise specified)
Market capitalization to revenue from operations	2.79	2.94
Market capitalization to earnings (profit after tax)	32.01	33.69
Enterprise value to EBITDA	18.39	19.36
Price-to-earnings ratio (Basic EPS)	32.55	34.35
Price-to-earnings ratio (Diluted EPS)	32.76	34.56

11. Details of weighted average cost of acquisition of all Equity Shares transacted in last 3 years, 18 months and one year, preceding the date of RHP:

Period prior todate of filingof the Red HerringProspectus	WeightedAverage Costof Acquisition (₹)*	Cap Priceis ‘X’ times theWeighted AverageCost of Acquisition	Range ofacquisition price:Lowest Price –Highest Price(₹)*
Last One year	29.02	15.20	0-174.10
Last 18 months	29.02	15.20	0-174.10
Last Three years	29.02	15.20	0-174.10

*As certified by Shah & Mantri, Chartered Accountants by the way of their certificate dated August 23, 2023.

12. Weighted average cost of acquisition compared to Floor Price and Cap Price:

Past transactions	WACA(in ₹)	Floor Pricein ₹ 418	Cap Pricein ₹441
WACA of Primary Issuances during18 months prior to RHP (excludingissuance of bonus shares)	89.56*	4.67 times	4.92 times
WACA of Secondary Transactionsduring 18 months prior to RHP(excluding gifts)	Notapplicable	Not applicable	Not applicable

* 3,606,110 CCPS were acquired by SACEF on September 17, 2013 at a price of ₹174.10 per CCPS. Pursuant to a resolution passed by the Board of Directors of the Company dated July 24, 2023, and a resolution passed by the shareholders of the Company dated July 25, 2023, the CCPS have been converted into 7,010,278 Equity Shares of ₹ 10 each. Hence, for the purposes of the table above, the date of conversion of the CCPS into Equity Shares has been considered as the date of acquisition and the original cost of acquiring the CCPS has been considered towards determining the acquisition price.

 

Mumbai, August 25, 2023:Nashikhead quarteredRishabh Instruments Limited, a global energy efficiency solution company,with its corporate office in Nashik, Maharashtra, focused on electrical automation, metering and measurement, precision engineered products and aluminium high pressure die castings with diverse applications across industries including power, automotive and industrial sectorshas fixed the price band at ₹418to ₹441per Equity Share for its initial public offer. The initial public offering (“IPO” or “Offer”) of the Company will open on Wednesday, August 30, 2023, for subscription and closes on Friday, September 01, 2023. Investors can bid for a minimum of 34Equity Shares and in multiples of 34Equity Shares thereafter.

 

The IPOof face value of ₹10 per Equity Share comprises of fresh issuance of equity shares worth Rs 75 crore and an Offer for Sale (OFS) up to 9.43 million equity shares.

 

Narendra JoharimalGoliya founded Rishabh Instruments in the year 1982 and has over 4 decades of experience in the electrical and electronic instruments industry. The company supplies a wide range of electrical measurement and process optimization equipment and engages in the design, development, manufacturing, and sale of devicessignificantly under its own brandacrossseveral sectors.

It is a vertically integrated playerinvolved in designing, developing, manufacturing and supplying electricalautomation devices; metering, control and protection devices; portable test and measuring instruments; andsolar string inverters. Additionally, through its subsidiary, Lumel Alucast, it manufactures and supplies high pressure die cast aluminum components to the automation and automotive industry mainly in Europe.

According to the F&S report mentioned in the Red Herring Prospectus (“RHP”), the Company is a global leader in the manufacture and supply of analog panel meters and is also one of the leading global manufacturers and suppliers of low voltage current transformers. For meters, controllers, and recorders, Lumel is the most popular brand in Poland, and Lumel Alucast is one of the leading non-ferrous pressure casting players in Europe.

Rishabh Instruments’ revenue from operations increased by 21.11% from Rs 470.25 crore in Fiscal 2022 to Rs 569.54 crore in Fiscal 2023, primarily driven by increase in revenue from sale of goods and from sale of services, whereas profit grew to Rs 49.69 crore in Fiscal 2023, as compared to Rs 49.65 crore in Fiscal 2022.

In case of any revision in the Price Band, the Bid/ Offer Period shall be extended for at least three additional Working Days after such revision of the Price Band, subject to the total Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, our Company in consultation with the BRLMs, for reasons to be recorded in writing, extend the Bid / Offer Period for a minimum of three Working Days, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges by issuing a press release and also by indicating the change on the websites of the BRLMs and at the terminals of the Members of the Syndicate and by intimation to Designated Intermediaries and the Sponsor Bank(s). The Offer is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), read with Regulation 31 of the SEBI ICDR Regulations. The Offer is being made through the Book Building Process in accordance with Regulation 6(1) of the SEBI ICDR Regulations wherein not more than 50% of the Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that our Company and Selling Shareholders in consultation with the BRLMs may allocate up to 60% of the QIB Portion to Anchor Investors and the basis of such allocation will be on a discretionary basis by our Company and Selling Shareholders, in consultation with the BRLMs, in accordance with the SEBI ICDR Regulations (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from the domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (“Anchor Investor Allocation Price”). In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (other than the Anchor Investor Portion) (the “Net QIB Portion”). Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, subject to valid Bids being received at or above the Offer Price, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Offer Price. Further, not less than 15% of the Offer shall be available for allocation to Non-Institutional Investors (“Non-Institutional Category”) of which one-third of the Non-Institutional Category shall be available for allocation to Bidders with an application size of more than ₹200,000 and up to ₹1,000,000 and two-thirds of the Non-Institutional Category shall be available for allocation to Bidders with an application size of more than ₹1,000,000 and under-subscription in either of these two sub-categories of the Non-Institutional Category may be allocated to Bidders in the other sub-category of the Non-Institutional Category in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. Further, not less than 35% of the Offer shall be available for allocation to Retail Individual Investors (“Retail Category”), in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. All Bidders (except Anchor Investors) shall mandatorily participate in this Offer only through the Application Supported by Blocked Amount (“ASBA”) process and shall provide details of their respective bank account (including UPI ID (defined hereinafter) in case of UPI Bidders (defined hereinafter) in which the Bid Amount will be blocked by the Self Certified Syndicate Banks (“SCSBs”) or pursuant to the UPI Mechanism, as the case may be. Anchor Investors are not permitted to participate in the Anchor Investor Portion through the ASBA process. For details, see “Offer Procedure” on page 463 of the RHP.

DAM Capital Advisors Limited, Mirae Asset Capital Markets (India) Private Limited and Motilal Oswal Investment Advisors Limited are the book running lead managersto the Offer and KFin Technologies Limited is the Registrar to the Offer. The Equity Shares are proposed to be listed on the main board platform of the stock exchanges i.e., BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE")