Stock of recently listed firm hits record high today, zooms 24% in 2 days

Shares of recently listed R K Swamy sprinted 15.4 per cent to Rs 286.95 apiece, also its fresh record high, on the BSE in Friday's intraday trade amid heavy volume. At 12:55 PM, the shares were quoting 10 per cent higher at Rs 274 per share as against 0.7 per cent (508 points) decline in the benchmark S&P BSE Sensex.

The shares were ruling higher for a second straight day, having surged 24 per cent during the period. The 30-share Sensex, on the other hand, has shed 0.3 per cent in two days. 

R K Swamy is one of the leading integrated marketing service groups in India, offering a single-window solution for creative, media, data analytics, and market research services. 
 

It is one of the top 10 diversified integrated marketing communications services groups in India, providing a single window solution for three areas - Integrated Marketing Communications, Customer Data Analytics and Marketing Technology, and Full-Service Market Research. 

The rebound in the shares come after two days of consistent lossed. The stock debuted on the exchanges on March 12 with a 13 per cent discount.

The shares got listed at Rs 250 on the National Stock Exchange (NSE), and Rs 252 on the BSE as against the issue price of Rs 288 per share. They, eventually, ended the day at Rs 263.25 per share. Further, the shares extended their decline the next day to hit a 52-week low of Rs 227.75.

The initial public offer (IPO) of RKSL, meanwhile, received 212.23 million bids for shares as against 8.23 million shares on offer, according to stock exchange data. The issue was subscribed 25.78 times.

In FY23, the company published more than 818 creative campaigns on behalf of its clients across various media. The company's numerous clients include Aditya Birla Sun Life AMC Limited, Cera Sanitaryware Limited, Dr. Reddy's Laboratories Limited, E.I.D. - Parry (India) Limited, Fujitsu General (India) Private Limited, Gemini Edibles and Fats India Limited, Havells India Limited, Hawkins Cookers Limited, Himalaya Wellness Company, Hindustan Petroleum Corporation Limited, ICICI Prudential Life Insurance Company Limited, IFB Industries Limited, Mahindra and Mahindra Limited, Oil and Natural Gas Corporation Limited, Royal Enfield (a unit of Eicher Motors), Shriram Finance Limited, Tata Play Limited, Ultratech Cement Limited, and Union Bank of India.

On the financial front, the company reported an increase in topline at a CAGR of 19 per cent from FY21. For FY23, the Ebitda and PAT margins were 20.97 per cent and 10.68 per cent, respectively, while ROE and ROCE were 22.20 per cent and 28.95 per cent, respectively.

According to analysts at Reliance Securities, RKSL is well positioned to leverage its core competitive strengths built over five decades and focus on delivering an attractive combination of service offerings. The total addressable market, they said, is expected to grow in double digits for Integrated Marketing Communications (13-15 per cent CAGR till FY28) with higher growth in digital share, Customer Data Analytics and MarTech (13-15 per cent CAGR till FY28), and Full-Service Market Research (9-10 per cent CAGR till FY28). 

"RKSL longstanding customer relationships with government companies and agencies to create awareness about its policies, promote various new initiatives, health and educations schemes, state wise marketing services are the key positives. We believe with improvement in margins, newer cities and innovative campaigns in digital medium improving the overall customer experience helps to build brands leveraging the success for clients," the brokerage had said in its IPO note. It recommend investors to 'Subscribe' to the issue for long term.

Echoing similar views, those at Indsec Securities, too, suggested investors 'Subscribe' to the issue as the marketing services industry is expected to grow at a CAGR of 12.5-14.5 per cent over FY23-FY28E period on back of higher emphasis on analytics, rise in digital and social media marketing, increasing prominence on experimental marketing etc.


"With robust financial track record and positive industry outlook, the IPO is an attractive proposition," they said.

However, analysts have been slightly concerned over the company's valuations.

"The company is raising funds for setting up studio with post production facilities, auto marketing platform and data repository platform. The company’s P/E is valued at 40.96x for FY23. The annualized P/E for FY24 stands at 80x which appears expensive while H2FY2024 contributes 60-65 per cent of company’s earnings," said analysts at Canara Bank Securities.