IPO: Rishabh Instruments

In a nutshell Quality : Rishabh Instruments' three-year average ROE (return on equity) and ROCE are 13 and 13.7 per cent, respectively. Growth : Its revenue and net profit grew by 20.9 and 16.1 per cent per annum, respectively between FY21 and FY23. Valuation : The stock will trade at a P/E (price to earnings) of 35.8 times and P/B (price to book) of 3.5 times, respectively. There are no listed peers. Overview : Global expenditure on manufacturing facilities and higher requirements for electrification are the key growth drivers for the company. As a result, it has reported healthy growth in topline and profitability. However, weakening of the global economy can prove fatal for the business. About Rishabh Instruments Rishabh Instruments, incorporated in 1982, designs and manufactures electrical automation and measuring instruments used in various industries. The company has two manufacturing facilities each in India and Poland and one facility in China. It generated 65.7 per cent of its revenue from exports in FY23. In terms of revenue, the two biggest segments are metering control and protection devices (42.6 per cent) and aluminium high-pressure die castings (39.6 per cent), as of FY23. Strengths of Rishabh Instruments It is the global leader in analog panel meters and among the leading global companies in low-voltage current transformers. The company has managed to maintain long-term relationships with its key customers in the Indian as well as global markets. Revenue from existing customers accounted for 88.1 per cent of the total revenue. Operates four end-to-end vertically integrated manufacturing and R&D facilities , two each in Poland and India. Weaknesses of Rishabh Instruments Out of the five manufacturing facilities, one in Poland accounts for 62.7 per cent of total units produced. Moreover, around 70 per cent of the total revenue is generated from the European region. Any adversity in the region or weakening of Europe's economy can prove fatal for the company's business. The company relies on acquisitions to expand its addressable market. Though it has worked in the past, any larger-than-ideal acquisitions could be detrimental to Rishabh Instruments' financial health. IPO details Total IPO size (₹ cr) 491 Offer for sale (₹ cr) 416 Fresh issue (₹ cr) 75 Price band (₹) 418-441 Subscription dates August 30, 31 and September 1, 2023 Purpose of issue To fund capex Post-IPO M-cap (₹ cr) 1674 Net worth (₹ cr) 484 Promoter holding (%) 70.7 Price/earnings ratio (P/E) 35.8 Price/book ratio (P/B) 3.5 Financial history Key financials 2Y growth (% pa) FY23 FY22 FY21 Revenue (₹ c