Thursday, September 27, 2012

RCL Retail IPO

RCL Retail, a Chennai-based ready-to-eat food retailer, has entered capital market with a public issue of 57.95 lakh equity shares. The company is engaged in the business of trading of ready to eat snacks, fryums, bakery products, cookies, confectioneries, namkeens, chutneys, mouth-fresheners, juices, mobile food such as vada pav etc. The company aims to raise Rs 5.795 crore through the issue. The issue comprises of promoter's contribution of 21.05 lakh shares and 6.15 lakh shares, which will be reserved for subscription by market makers. Net issue to the public is of 30.75 lakh shares aggregating to Rs 3.075 crore.

The IPO shall open on 27 September, 2012 and shall close on 1 October, 2012. The company has fixed the price of the IPO at Rs 10 per share.

The company intends to utilize the proceeds of the IPO for setting up of eight new retail outlets (with an outlay of Rs 69.4 lakh); food grain processing unit (with a cost of Rs 4.729 crore); strengthening supply chain management (with Rs 38.90 lakh) and for general corporate expenses (Rs 1 crore). The company plan to deepen our areas of operations by setting up a processing unit with the facility of processing food grains, pulses and retailing under brand name of RCL and also plan to expand our presence geographically by adding eight (8) retail stores in and around Chennai.

Currently promoters, Nitesh Lodha and Shreyans Lodha hold 3.65% and 1.84% stake in the company, which will be increased to 11.72% and 10.77% post issue, respectively. Total promoters' holding will be increased to 25.04% from 10.30% post issue.

The equity shares are proposed to be listed on the BSE SME platform. Guiness Merchant Bankers Pvt Ltd is the book running lead manager to the issue.

Recommendation:

We do not recommend investors to invest in this IPO at this time.

Listing:

RCL Retail IPO got listed on 16 October, 2012. The stock opened at Rs 10.10 and closed at an intraday high of Rs 10.45, a rise of 4.5 percent over its issue price.


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