Rolex Rings makes strong debut, lists at 39% premium over issue price

Rolex Rings listed at Rs 1,250 as against issue price of Rs 900 per share on the NSE

Rolex Rings made a strong debut on the bourses as the shares of the company got listed at Rs 1,250, a 39 per cent premium over the issue price of Rs 900 per share on the National Stock Exchange (NSE). On the BSE, the stock of the auto parts and equipment company opened at Rs 1,249 per share.

Post listing, the stock moved higher to Rs 1,264.95 on the BSE, up 41 per cent against the issue price. At 10:01 am, it was trading at Rs 1,198.20 after hitting a low of Rs 1,182 in intra-day trade. A combined 2.5 million equity shares changed hands on the counter on the NSE and BSE.

The initial public offer (IPO) of Rolex Rings received a strong response from all types of investors, with the issue getting subscribed 130 times. The institutional portion was subscribed 143 times, the wealthy investor portion 360 times, and the retail investor portion 24.5 times.

The Rs 731-crore IPO generated bids worth Rs 66,744 crore. It had priced its initial public offer (IPO) between Rs 880-900 per share.

Rolex Rings is a manufacturer and supplier of hot rolled forged and machined bearing rings, and automotive components for two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles, industrial machinery, wind turbines and railways, amongst other segments. It also supplies its products to some leading bearing manufacturing companies, tier-I suppliers to global auto companies and some auto original equipment manufacturers (OEM).

The client base of RRL consists of leading global bearing manufacturers viz. SKF, Timken, Schaeffler, NEI & NRB Bearings. Rolex Rings has three manufacturing units in Rajkot, consisting of 22 forging lines with a combined capacity of 144750 MTPA and machining facilities consisting of 528 spindles with a combined installed capacity of 69 million parts per annum.

“As the industrial segment picks up led by increased capex spend by public and private sector coupled with a recovery in the auto sector, Rolex Rings should see strong traction from bearing manufacturers. The bearing clientele of Rolex Rings constitutes 80 per cent of the total market, hence, ensuring strong traction for RRL once the tide turns. A sticky clientele, increasing share of business amongst existing customers, improving operational efficiencies led by better utilisation and exit from CDR remain a key catalyst for Rolex Rings,” ICICI Securities had said in its IPO note.

Meanwhile, analysts at Nirmal Bang had opined that Rolex is a proxy play on global growth in the industries of bearings and auto components. With the global, as well as domestic industrial investment cycle, having troughed out last year, the brokerage expects a gradual recovery to have a positive rub-off on auto ancillary plays such as Rolex. 

"Although there is no direct comparable peer to Rolex, we compare it with prominent forgings and auto component players. We observe that Rolex’s financial metrics, as well as valuations, are broadly in line with that of other players. The historical growth is lagging others which is compensated by the company’s higher return ratios,” analysts at Nirmal Bang Securities had said.