Royalarc Electrodes IPO is a book built issue valued at ₹36.00 crores. It is a combination of a fresh issue of 18.00 lakh shares aggregating to ₹21.60 crores and an offer for sale of 12.00 lakh shares aggregating to ₹14.40 crores. The IPO opens for subscription on February 14, 2025 and closes on February 18, 2025. The allotment is expected to be finalised on February 19, 2025, with a tentative listing date of February 21, 2025, on NSE SME.
The IPO price is set at a price band of ₹114 to ₹120 per share. Retail investors need a minimum investment of ₹1,44,000 for one lot of 1200 shares, while HNI investors must invest in at least two lots, amounting to ₹2,25,600.
Fedex Securities Private Limited is the book-running lead manager for this issue, while Kfin Technologies Limited serves as the registrar. Shreni Shares Limited is the market maker.
For detailed financial and operational information, investors can refer to the Royalarc Electrodes IPO RHP. This IPO presents an opportunity to invest in a growing enterprise listed on the SME platform.
Industry Outlook
- The Indian welding consumables industry is experiencing steady growth, driven by increased industrialisation, infrastructure projects, and manufacturing expansion. The demand for welding electrodes, flux-cored wires, and MIG/TIG wires is rising across sectors like railways, construction, shipbuilding, and oil and gas.
- Government initiatives such as "Make in India" and the National Infrastructure Pipeline (NIP) are further boosting domestic manufacturing and creating opportunities for welding solution providers. The Indian welding industry is expected to grow at a CAGR of around 6-8% over the next five years, supported by advancements in automation, robotics, and high-efficiency welding technologies.
Royalarc Electrodes IPO Objectives
The company proposes to utilise the net proceeds from the IPO for the following objectives:
- Funds will be allocated to expand and upgrade manufacturing facilities, improving efficiency and increasing production output to meet rising market demand.
- A portion of the proceeds will be utilised to repay outstanding borrowings, reducing the company's financial liabilities and enhancing its overall financial health.
- The proceeds will be used to modernise equipment and adopt advanced manufacturing technologies, improving quality, efficiency, and sustainability.
- The company will use part of the funds to meet its day-to-day operational expenses, ensuring smooth business operations and better cash flow management.
- Investment will be made in research and development to introduce innovative welding solutions and enhance product offerings.
- Strengthening the distribution network and market reach to expand domestic and international sales.
- Enhancing working capital reserves to ensure smooth operations and financial stability.
About Royalarc Electrodes Limited
Royal Arc Electrodes Limited was incorporated on January 15, 1996, as Royalarc Electrodes Private Limited and later converted into a public limited company on March 9, 2005. The company is headquartered at 72 B, Bombay Talkies Compound, S.V. Road, Malad West, Mumbai, Maharashtra, 400064.
It is engaged in the manufacturing of welding consumables, including welding electrodes, flux-cored wires, and MIG/TIG wires, catering to multiple industries. The company's products are used in critical industries such as railways, shipbuilding, oil and gas, construction, and heavy engineering.
Its manufacturing facility in Umbergaon, Gujarat, is spread over 25,082.61 sq. meters and is equipped with advanced automation and quality control systems. The company is ISO 9001:2015 certified, ensuring adherence to stringent quality standards and international benchmarks.
Royal Arc Electrodes Limited operates a strong B2B business model, supplying to major industrial clients and government projects. The IPO proceeds will be utilised for expanding manufacturing capacity, reducing debt, and strengthening financial stability to support long-term business growth.
How To Check the Allotment Status of the Royalarc Electrodes IPO?
Steps to check IPO allotment status on Angel One’s app:
- Log in to the Angel One app.
- Go to the IPO Section and then to IPO Orders.
- Select the individual IPO that you had applied for and check the allotment status.
- Angel One will notify you of your IPO allotment status via push notification and email.
How To Apply for Royalarc Electrodes IPO Online?
- Login to Your Angel One Account: Open the Angel One app or website and log in with your credentials.
- Locate the IPO Section: Navigate to the 'IPO' section on the platform.
- Select IPO: Find and select the Royalarc Electrodes IPO from the list of open IPOs.
- Enter the Lot Size: Specify the number of lots you want to bid for.
- Submit Your UPI ID: Enter your UPI ID to link your payment method and submit your application.
- Approve Funds: Once you receive the bid request on your UPI app, approve it by entering your UPI PIN.
Contact Details of Royalarc Electrodes IPO
Registered office: 72 B, Bombay Talkies Compound, S.V. Road, Malad West, Mumbai, Maharashtra, India, 400064
Phone: +91 78880 00553
E-mail: cs@royalarc.in
Royalarc Electrodes IPO Lot Size
|
Application |
Lots |
Shares |
Amount |
|
Retail (Min) |
1 |
1200 |
₹1,44,000 |
|
Retail (Max) |
1 |
1200 |
₹1,44,000 |
|
HNI (Min) |
2 |
2400 |
₹2,25,600 |
Royalarc Electrodes IPO Category Reservation
|
Investor Category |
Shares Offered |
|
Anchor Investor Shares Offered |
8,40,000 (28%) |
|
Market Maker Shares Offered |
1,53,600 (5.12%) |
|
QIB Shares Offered |
5,60,400 (18.68%) |
|
NII (HNI) Shares Offered |
4,45,200 (14.84%) |
|
Retail Shares Offered |
10,00,800 (33.36%) |
|
Total Shares Offered |
30,00,000 (100%) |
Royalarc Electrodes IPO Anchor Investors' Details
|
Bid Date |
February 13, 2025 |
|
Shares Offered |
8,40,000 |
|
Anchor Portion Size (In Cr.) |
10.08 |
|
Anchor lock-in period end date for 50% shares (30 Days) |
March 21, 2025 |
|
Anchor lock-in period end date for remaining shares (90 Days) |
May 20, 2025 |
Royalarc Electrodes IPO Promoter Holding
Bipin Sanghvi, Tarulata Sanghvi, Hardik Sanghvi and Swagat Sanghvi are the promoters of the company.
|
Share Holding Pre-Issue |
99.99% |
|
Share Holding Post Issue |
72.96% |
Key Performance Indicators for Royalarc Electrodes IPO
As of March 31, 2024, the market capitalisation of Royalarc Electrodes's IPO is ₹133.20 crore. Here are the KPIs of Royalarc Electrodes:
|
KPI |
Value |
|
RoE (%) |
32.85 |
|
RoCE (%) |
37.73 |
|
EBITDA Margin (%) |
18.16 |
|
PAT Margin |
11.95 |
Price Metrics
|
Metric |
Pre-IPO |
Post-IPO |
|
EPS (₹) |
4.86 |
5.82 |
|
P/E (x) |
19.34 |
16.16 |
Note: The Pre IPO EPS is calculated based on pre-issue shareholding as of the date of RHP and the latest FY earnings as of March 31, 2024, that is available in RHP. The post-issue EPS is calculated based on the post-issue shareholding and annualized FY earnings of September 30, 2024, that are available in RHP.
Royalarc Electrodes IPO Prospectus
Royalarc Electrodes IPO Registrar and Lead Managers
Royalarc Electrodes IPO Lead Managers
- Fedex Securities Private Limited
Registrar for Royalarc Electrodes IPO
Kfin Technologies Limited
- Contact Number: 04067162222
- Email Address: rael.ipo@kfintech.com
Royalarc Electrodes IPO Registrar
Financial Performance of Royalarc Electrodes Limited
| Particulars | Year ending on March 31, 2024 | Year ending on March 31, 2023 |
|---|---|---|
| Revenue from operations (in ₹ lakh) | 9,978.75 | 9,694.02 |
| PAT (in ₹ lakh) | 1,192.63 | 956.82 |
| EBITDA (in ₹ lakh) | 1,811.72 | 1,542.35 |
| ROE (%) | 32.85 | 37.43 |
| ROCE (%) | 37.73 | 41.81 |
| Net Debt / EBITDA Ratio (x) | (0.04) | (0.10) |
| Debt Equity Ratio (x) | 0.00 | 0.05 |
Know before investing
Strengths
8Royal Arc Electrodes has over 25 years of experience in the welding consumables industry, establishing a strong market presence.
The company offers a diverse range of welding consumables, including welding electrodes, flux-cored wires, and MIG/TIG wires, catering to various industrial applications.
Its manufacturing facility in Umbergaon, Gujarat, is equipped with advanced automation and quality control systems, ensuring high efficiency and consistent product standards.
Strong leadership from its promoters, Bipin Sanghvi, Tarulata Sanghvi, Hardik Sanghvi, and Swagat Sanghvi, supports strategic decision-making and business expansion.
The Indian welding consumables market is expected to grow steadily, driven by increasing infrastructure development, industrialisation, and government-led manufacturing initiatives.
The IPO proceeds will be utilised for manufacturing capacity expansion, facility modernisation, and business growth, enhancing competitiveness.
Government initiatives like "Make in India" and the National Infrastructure Pipeline (NIP) provide financial and policy support for the manufacturing sector, benefiting companies like Royal Arc Electrodes.
Growing demand for high-quality welding solutions in sectors such as construction, oil and gas, shipbuilding, and heavy engineering presents expansion opportunities for the company.
Risks
8The company operates in a highly competitive welding consumables industry, facing competition from both domestic and international players, which may impact market share and profitability.
Dependence on raw materials like steel and alloys exposes the company to price fluctuations, affecting production costs and profit margins.
Regulatory changes, including environmental norms and industrial safety standards, could lead to increased compliance costs and operational challenges.
Any disruptions in the supply chain, such as logistics delays or raw material shortages, may impact production schedules and order fulfilment.
Economic downturns or reduced industrial activity in key sectors like construction, shipbuilding, and infrastructure could affect demand for welding consumables.
The company relies on a select group of customers for a significant portion of revenue, posing a risk if any major client reduces or discontinues orders.
Currency fluctuations and global trade policies may affect export competitiveness and international market profitability.
The success of the IPO and future growth depends on effective fund utilisation, execution of expansion plans, and maintaining financial stability.
Royalarc Electrodes Limited Peer Details Comparison
| Company Name | EBDITA Margin (%) | PAT Margin (%) | Return on Equity (%) | Return on Capital Employed (%) |
|---|---|---|---|---|
| Royalarc Electrodes Limited | 18.16 | 11.95 | 32.85 | 37.73 |
| Ador Welding Limited | 11.65 | 7.15 | 17.44 | 22.40 |
| Gee Limited | 8.19 | 3.48 | 6.29 | 9.10 |
| Rasi Electrodes Limited | 6.12 | 3.82 | 9.83 | 12.88 |
| ESAB India Limited | 18.83 | 13.11 | 53.25 | 72.91 |
