About the company
Incorporated in 1995, R R Kabel Limited is one of the leading companies in the Indian consumer electrical industry (comprising wires and cables and fast-moving electrical goods (FMEG), with an operating history of over 20 years in India.
It is the fastest-growing consumer electrical company among its peers in India, growing at a CAGR of 43.4% between Fiscal 2021 and Fiscal 2023, and is the fifth largest player in branded wires and cables market in India, representing approximately 7% market share by value as of March 31, 2023, as compared to approximately 5% market share by value as of March 31, 2015.
The company manufactures, markets, and sells wires and cable products under ‘RR Kabel’ brand, and fans and lights under the ‘Luminous Fans and Lights’ brand and has one of the largest network of electricians, covering 271,264 electricians across India, as of March 31, 2023. They also have 35 international product certifications.
They had one of the highest revenue contributions from the business-to-consumer (B2C) sales channel in wires and cables with approximately 74% of revenue coming from the B2C sales channel as of March 31, 2023.
It has one of the highest number of distributors servicing the extensive retail footprint in the consumer electrical industry as of March 31, 2023, and has increased its retailer outlets by 3.5 times from 30,570 in Fiscal 2021 to 106,626 in Fiscal 2023.
The company owns and operates two integrated manufacturing facilities which are located at Waghodia, Gujarat, the Waghodia Facility, and Silvassa, Dadra and Nagar Haveli and Daman and Diu (“Silvassa Facility”) in India, which primarily carry out manufacturing operations in respect of wire and cables and switches. Its Waghodia Facility is one of the largest consumer electrical manufacturing facilities in India as of March 31, 2023, with an annual manufacturing capacity of 2.1 million CKM of wires and cables.
Sales
Domestic sales: With an extensive pan-India distribution presence and as on June 30, 2023, they have 3,450 distributors, 3,656 dealers, and 114,851 retailers, on a non-exclusive basis. As on June 30, 2023, we have 21 warehouses across 17 states and union territories in India.
Exports: During Fiscals 2021 to 2023 and three months ended June 30, 2023, The company sold its products to 63 countries in North America, APAC, Europe, and the Middle East. For the three-month period ending June 30, 2023, 99% of the export revenue was derived from distributors, and 1% was derived from original equipment manufacturers (OEMs).
About the industry:
Consumer Electrical Industry in India
India is the third-largest producer and the second-largest consumer of electricity in the world. The consumer electrical industry is one of the important aspects of the Indian economy, contributing approximately 8% to the country’s manufacturing production, approximately 1.5% of India’s GDP and approximately 1.5% of India’s exports.
The consumer electrical industry entails heavy electrical products such as W&C and light electrical products such as FMEG. A wire is a single conductor, whereas a cable is a group of conductors, used for, among other things, transmitting electricity and telecommunication signals. FMEG includes electrical goods and appliances such as fans, lighting, electric heaters, and other household appliances.
The consumer electrical industry consisting of W&C and FMEGs was estimated at approximately ₹ 1,81,150 crore in Fiscal 2023 and is expected to grow at a CAGR of approximately 10% till Fiscal 2027 to reach a market value of approximately ₹ 2,66,500 crore. The industry is highly competitive with the presence of many national and regional players (manufacturers, traders, suppliers, importers, etc.), competing on the basis of factors such as products, price, customer service, post-sales services, quality, and delivery.
There are six key factors supported by a positive macro environment that is expected to provide growth in the W&C and FMEG industry between Fiscals 2022 and 2032:
- Public and private investment outlay in infrastructure
- Continued growth of residential real estate sector
- Resilient commercial real estate sector
- Transition of automobiles and transport towards electric vehicles (“EVs”)
- Rural electrification
- Push towards renewable energy
Wires and Cables Market in India
The W&C market constitutes approximately 41% of the Indian W&C and FMEG industry. It has grown at a CAGR of approximately 11% from ₹ 33,500 crore in Fiscal 2015 to ₹ 74,800 crore in Fiscal 2023 and is further expected to grow at a CAGR of approximately 13% till Fiscal 2027 to reach a market value of ₹ 1,20,000 crore.
Fan Market in India
The total market for fans has grown at a CAGR of approximately 12% from ₹ 5,690 crore in Fiscal 2015 to ₹ 13875 crore in Fiscal 2023 and is further expected to grow at a CAGR of approximately 7% till Fiscal 2027 to reach a market value of ₹ 18,500 crore.
Lighting Market in India
The total market for lighting in India was estimated at approximately ₹ 33,600 crore in Fiscal 2023 which grew at a CAGR of approximately 12% from ₹ 14,000 Cr. in Fiscal 2015. This market is expected to grow at a CAGR of approximately 11% till Fiscal 2027 to reach nearly ₹ 50,500 crore in annual sales.
Switch and Switchgear Market in India
The total market size of the switch and switchgear industry in India was collectively estimated at approximately ₹ 29,160 crore in Fiscal 2023. This has grown at a CAGR of approximately 8% from Fiscal 2015, when its size was at ₹ 15,500 crore. Going forward, the collective market (of switches and switchgear) is expected to grow at a CAGR of approximately 7% till Fiscal 2027 and reach approximately ₹ 38,000 crore of annual sales in Fiscal 2027.
Peer Comparison
| Company | Revenue from operations | EBITDA Margin(%) | PAT | RoE(%) | Working Captial cycle (days) |
|---|---|---|---|---|---|
| RR Kabel | 5599 | 6.3 | 189 | 14.2 | 75 |
| Finolex Cables | 4481 | 13.6 | 434 | 10.5 | 64 |
| Polycab | 14108 | 13.9 | 1292 | 21.1 | 66 |
| KEI Ind | 6912 | 10.6 | 477 | 20.2 | 97 |
| Havells | 16911 | 10.4 | 1072 | 17 | 45 |
| Bajaj Electricals | 5429 | 7.9 | 216 | 12 | 52 |
| Crompton | 6870 | 12.1 | 476 | 15 | 11 |
| V Guard | 4126 | 8.1 | 189 | 12.5 | 88 |
Note:
Working Capital Cycle= Trade Receivables days + Inventory days – Trade Payable days
ROE = PAT/Average Shareholder’s Equity
EBITDA Margin = EBITDA/ Total Income
Source: Technopak Analysis, Annual Reports
Objects of the issue and proceeds utilization:
The Rs. 1964.01 crores public offer of R R Kabel Limited comprises fresh equity issue worth 180 crores and OFS worth 1784.01 crores.
| Purpose | Proceeds (₹ crores) |
|---|---|
| Repayment or prepayment, in full or in part, of borrowings availed by the Company | 136 |
| General corporate purposes | Balance |
Financial information and other valuation metrics
| Financial Year | Total Assets (₹ crores) | Total Revenue (₹ crores) | Profit After Tax (₹ crores) | EPS | EBITDA (₹ crores) |
|---|---|---|---|---|---|
| March 31, 2021 | 1715.11 | 2745.93 | 135.39 | 12.19 | 253.24 |
| March 31, 2022 | 2050.64 | 4432.18 | 213.93 | 19.26 | 353.72 |
| March 31, 2023 | 2633.62 | 5633.64 | 189.87 | 17.09 | 357.70 |
Risk factors to consider:
Company’s performance is subject to seasonality: The wires and cables and the fast-moving electrical goods industry are subject to seasonality. Typically, customers purchase FMEG products such as fans and water heaters due to seasonal factors. For example, fan sales increase leading up to the summer season, and water heater sales increase in the cooler winter months.
Volatility in the costs of the raw materials: With nearly 85% of the total raw material cost, the company’s primary raw materials include aluminum, copper, galvanized iron, and packing material. Bigger fluctuations in raw material prices may have a material adverse effect on the business, financial condition, results of operations, and cash flows.
IPO Schedule
| Issue Period | 13th September to 15th September 2023 |
|---|---|
| Price band | ₹ 983 - 1035 |
| Minimum Bid quantity | 14 & Multiples thereof |
| Deadline for accepting UPI mandate | Until 5 PM on the issue closing day |
| Finalization of Allotment | 21st September 2023 |
| Initiation of Refunds | 22nd September 2023 |
| Credit of Shares | 25th September 2023 |
| Date of Listing | 26th September 2023 |
| Mandate end date | 30th September 2023 |
| Anchor Investors Lock-In End Date | 15th October 2023 |
How to apply to the R R Kabel Limited IPO?
You can apply for the R R Kabel Limited IPO using any supported UPI app by following two steps:
- Enter your bid on Kite
- Accept the UPI mandate on your phone
On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.
How to check the allotment status for R R Kabel Limited IPO?
You can check the allotment status for the R R Kabel Limited IPO on the website of the Registrar and Transfer agent. Alternatively, you can also check the allotment status on the NSE website.