RK Swamy IPO: Analysts Recommend ‘Subscribe for Long Term’ as ₹423-crore Issue Opens Today

The much-anticipated initial public offering (IPO) of RK Swamy, a prominent integrated marketing services provider, opens for subscription today, March 4, with a price band set at ₹270-288 per share. The bidding process will span three days, concluding on March 6. In the prelude to the IPO, the company’s shares were trading at a premium of ₹90 in the grey market.

Analyst Consensus: Subscribe for Long Term

Analysts across various brokerage firms have unanimously given a ‘Subscribe for long term’ rating to the RK Swamy IPO, emphasizing the company’s robust 15-year track record in the Data Analytics and Marketing Technology segment. Reliance Securities, Anand Rathi, and BP Wealth have all highlighted the company’s well-diversified customer base, strong management, and successful campaigns in both domestic and global markets.

Reliance Securities supports its recommendation by underlining RK Swamy’s enduring relationships with government entities, which play a pivotal role in creating awareness about policies and promoting initiatives in sectors like health and education.

Anand Rathi applauds RK Swamy’s comprehensive solutions, encompassing creative, media, data analytics, and market research services under one roof. The firm sees the company as a leader in the field of market research, with a proven capability to generate digital content at scale.

BP Wealth focuses on valuation, stating that RK Swamy’s P/E ratio of 41 times, based on FY23 earnings, is reasonable compared to the industry average. The firm acknowledges the inherent initial risk in the digital marketing analytics business but sees the IPO as an opportunity for substantial returns.

IPO Details and Usage of Funds

RK Swamy’s IPO comprises a mix of fresh shares worth ₹173 crore and an offer-for-sale of 87 lakh equity shares by promoters and investors. The promoters, Srinivasan K Swamy and Narasimhan Krishnaswamy, will sell 17.88 lakh equity shares each, while investors Evanston Pioneer Fund LP and Prem Marketing Ventures LLP will offload 44.45 lakh and 6.78 lakh equity shares, respectively.

The company plans to utilize ₹54 crore of the net fresh issue proceeds for working capital requirements, reduce the fund size required for working capital from ₹87 crore, set up a DVCP studio, invest in IT infrastructure development, and establish a new CEC and CATI.

Structure and Allocation

About 75% of the net offer is reserved for qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15% and retail investors 10%. Eligible employees of the company have shares worth ₹7.50 crore reserved for them, with a discount of ₹27 per share during the bidding process.

Company Overview and Financials

RK Swamy Ltd is the largest Indian majority-owned integrated marketing services provider, offering comprehensive solutions for creative, media, data analytics, and market research services. In fiscal 2023, the company released over 818 creative campaigns, handled over 97.69 terabytes of data, and conducted over 2.37 million consumer interviews.

Financially, RK Swamy reported a net profit of ₹7.93 crore and revenue of ₹142.55 crore for the period ending September 30, 2023. For the fiscal year ending March 31, 2023, the company achieved a net profit of ₹31.26 crore and sales of ₹299.91 crore.

IPO BRLM and Listing Details

SBI Capital Markets, IIFL Securities, and Motilal Oswal Investment Advisory are the merchant bankers to the IPO, with Kfin Technologies serving as the registrar. The allotment of shares is scheduled for March 7, with credit to depository accounts on March 11. The stock will be listed on both BSE and NSE on March 12.

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