The journey began as a partnership between Rupesh D Madeka and Manesh D Madeka in 1977-1978. In 2003, the firm got converted to a joint-stock company named Rolex Rings Private Limited. Subsequently, in 2021, Rolex Industries Limited (after this referred to as ‘The company’) became a public limited company. The company is coming up with an IPO, which opens for subscription on July 28, 2021. Here is all you would like to know about the Rolex Rings Limited IPO.
- Amongst the top five forging companies in India in terms of the installed capacity
- Manufacturer and global supplier of hot rolled forged and machined bearing rings, and automotive components for vehicles, industrial machinery, wind turbines and railways, and other segments
- The customers include domestic and global bearing manufacturers, auto companies and auto OEMs
- Top bearing manufacturers like SKF, Schaeffler, Timken, NEI and NRB form a part of the esteemed clientele. The company supplies bearing rings to such companies
- Long-standing client relations. 70% of the top 10 largest customers associated with the company for over a decade
The company started its manufacturing operations in 1988 in Rajkot. Currently, the company operates three manufacturing units in Rajkot. There are 22 forging lines with an installed capacity of 144,750 MTPA and 528 spindles with an installed capacity of 69 million parts annually. Other machinery includes heat treatment furnaces, cold rolling machines, etc.
The primary products are bearing rings (~58% of 2021 revenues) and automotive components (~42% of 2021 revenues). The company supplied its products to over 60 customers in 17 countries across India, the United States, European countries and Thailand.
Key strength areas
- A comprehensive product portfolio is suitable for a wide range of end-user industries such as automotive, railways, industrial infrastructure, renewable energy, etc.
- Capability and flexibility to manufacture cost-effectively
- Set-up in Rajkot, Gujarat provides good access to automotive clusters in West, North and South India. Further, proximity to ports of Kandla, Mundra and Pipavav helps the company cater to export needs
- Diverse customer base and long-standing relationship with clients
- Experienced promoters and strong management team with solid domain expertise
About the key promoters
Mr Manesh D Madeka, Chairman and MD, has over four decades of industry experience. He is associated with the company since its inception. In addition, Mr Bhautik Madeka and Mr Mihir Madeka have close to two decades of experience each.
Below is the condensed financial information.
Comparison with other industry peers
Industry average PE ratio of 77.5x
|Fresh issue of shares
|Rs 56 Cr
|Offer for sale (75,00,000 equity shares)
|Rs 675 Cr
|Gross issue size
|Rs 731 Cr
The selling shareholder (Rivendell PE LLC) shall receive all the amount related to the offer for sale.
Utilization of proceeds:
- Long-term working capital requirements (approx. Rs 45 cr)
- General corporate expenses
Rolex Rings Limited is amongst the top five forging companies in India. The company has a strong pedigree in the bearings and auto components manufacturing sector.
The government of India push to the manufacturing sector is positive. Further, the growth in the bearings segment and the growth in exports due to cost advantage will benefit established manufacturers.
However, declining revenues and shrinking margins is a cause of concern. Revenue concentration on top clients is also a risk. Past event of default in payment of certain loans in financial year 2013 have a negative bearing.
In conclusion, given the challenging financial performance, and valuation at levels comparable to established industry peers, we suggest investors to remain cautious.
The information provided in the red herring prospectus filed by the company with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend that the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks. Therefore, it should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.
About the author
The author is a senior finance professional with over fifteen years of work experience in corporate finance. He has an affinity for matters relating to personal finance and investment management. Through his writing, the author wants to share his knowledge and understanding of the subject.
The author has used his knowledge, experience, and understanding of the subject and has exercised extreme care and caution to avoid any possible mistakes. However, the author does not take any responsibility for any error that exists.
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Under any circumstances, the author shall not be liable for any views or analysis expressed in this note. Further, the opinions expressed are not binding on any authority or Court. We advise readers to consult their financial advisor for assistance in their specific case.