August 30, 2023 / 01:10 PM IST

Sensex Today | Prashanth Tapse, Research Analyst Sr VP Research, Mehta Equities:

Analysis of Rishabh Instrument IPO Offer

The Rishabh Instrument IPO offer provides investors with a unique opportunity to invest in a globally renowned company that specializes in manufacturing energy efficiency products in the electrical and electronic segments, catering to a wide range of industries. With a track record of successful acquisitions, Rishabh is expected to continue its growth strategy by expanding its presence in other developed economies.

One notable aspect of Rishabh is its diversified product portfolio and extensive customer base, which positions the company to enhance customer service, retention, and cross-selling. Looking at the financial performance over the years, Rishabh has recorded a healthy revenue growth of 20% and 21% in FY2022 and FY2023, respectively, while the bottom-line remained subdued at 0.07% in FY2023.

Valuation and Market Outlook

At the upper price band of Rs 441/-, and considering annualized earnings and fully diluted post-IPO paid-up capital, the IPO is asking for a market capitalization of Rs 1674 Crores, with a P/E ratio of 33.69x on a consolidated basis. Taking into account the company’s growth prospects and expected outlook, this valuation suggests that the IPO is fully priced-in.

Recommendation

Considering the company’s export-oriented business, which accounts for almost 66% of its revenue, as well as its strong brand presence in the niche products segment, we are inclined to recommend risk-taking investors to “Subscribe with Risk” to the IPO.

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