RR Kabel, which went public on September 20, has risen since its listing on BSE and NSE. It is now more than 15 percent higher than the issue price. The wire and cable company’s shares were trading at Rs 1,179 on BSE and Rs 1,180 on NSE on September 20, compared to the issue price of Rs 1,035 per share.
Brokerage firm Prabhudas Lilladher initiated coverage on RR Kabel shares with a ‘Buy’ call and a target price of Rs 1,407 per share, valued at 35x FY25 earnings. The price target is approximately 20 percent higher than Thursday’s closing price.
Praveen Sahay, Research Analyst at Prabhudas Lilladher Pvt Ltd believes that RR Kabel is capitalizing on several opportunities in the wire and cable (W&C) segment given its strong brand with a diverse product portfolio, well-structured plans for capacity expansion, increasing dealer base /distribution network and distribution-led export activities.
He is bullish on RR Kabel because of 1) a strong brand with a diverse product portfolio, 2) well-structured capacity expansion plans, 3) a growing dealer/distribution network, and 4) a distribution-led export business.
RR Cable is India’s fastest growing consumer electronics company during FY 2021-23 and the fifth largest in wires and cables, with a brand value market share of 7 percent at the end of FY 2023.
Revenue, EBITDA and PAT grew at a CAGR of 31 percent, 16 percent and 16 percent respectively in FY20-23. Analysts estimate that this percentage will grow by 16 percent, 33 percent and 36 percent respectively in FY23-26.
The company proposes to use the net proceeds to finance full or partial repayment or prepayment of loans taken by the company from banks and financial institutions, estimated at Rs 170 crore.
RR Kabel became the first company to see a listing of T+2 on the Indian primary markets when its shares started trading three days after the IPO closed for subscription.