The Resourceful Automobile Limited IPO is set to launch on August 22, 2024, offering a fresh issue of 10.24 lakh shares with a fixed issue amount of ₹11.99 crores. Operating under the well-regarded showroom name "Sawhney Automobiles", the company specializes in the dealership and service of Yamaha two-wheelers. Known for its exceptional customer service and quality products, Resourceful Automobile has established itself as a trusted name among motorcycle enthusiasts.

IPO Pricing and Subscription Details

The IPO price is set at ₹117 per share. The minimum lot size for this issue is 1,200 shares, making the minimum investment for retail investors ₹140,400. High-Net-Worth Individuals (HNIs) need to invest in a minimum of 2 lots, totaling ₹280,800. The subscription period for the IPO will run from August 22, 2024, to August 26, 2024. The allotment of shares is expected to be finalized by August 27, 2024, with the shares listed on the BSE SME by August 29, 2024.

Grey Market Premium and Market Sentiment

The Grey Market Premium (GMP) for Resourceful Automobile’s IPO is anticipated to be between ₹50 and ₹55. This implies a potential listing gain of approximately 40-45%. It's important to note that GMP is indicative and does not guarantee actual trading outcomes, as it is influenced by market demand and supply dynamics before the official listing. The GMP is provided for informational purposes and should be used with caution.

Financial Performance and Growth Prospects

Resourceful Automobile has shown steady financial performance over recent years. The company's revenue increased from ₹1,127.26 lakhs in FY21 to ₹1,938.26 lakhs in FY23, reflecting a robust growth trajectory. Similarly, EBITDA rose from ₹36.17 lakhs in FY21 to ₹301.56 lakhs in 11MFY24. The PAT also improved significantly, from ₹0.16 lakhs in FY21 to ₹152.24 lakhs in 11MFY24. These figures underscore the company’s solid operational performance and financial stability.

The IPO is priced with a pre-issue EPS of ₹9.33 and a post-issue EPS of ₹5.73. The pre-issue P/E ratio is 12.54x, while the post-issue P/E ratio is 20.41x. The ROCE for 11MFY24 stands at 31.22%, and the ROE is 0.93%. These metrics suggest that the IPO is fairly priced, with potential for future appreciation based on current financial indicators.

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Use of IPO Proceeds

The proceeds from the IPO will be allocated as follows:

Expansion: ₹216.26 lakhs will be used for opening new showrooms in the Delhi/NCR region, enhancing the company’s market reach.

Debt Repayment: ₹455.90 lakhs will be directed towards reducing existing debt, strengthening the company's financial position.

Working Capital: ₹336.00 lakhs will be utilized to meet incremental working capital needs, supporting operational requirements.

General Corporate Purposes: ₹125.86 lakhs will cover general corporate purposes and public issue expenses.

Investment Recommendation

The Resourceful Automobile IPO presents a compelling investment opportunity with strong financial performance and promising market prospects. The attractive Grey Market Premium and stable financial metrics make it a potential candidate for both listing gains and long-term investment. Investors should closely monitor this IPO and consider it for portfolio diversification. For more detailed information, refer to the company’s Red Herring Prospectus (RHP) and seek advice from certified financial experts before making investment decisions.

Conclusion

The Resourceful Automobile IPO offers an attractive opportunity for investors looking for potential gains and growth. With its strong financials and promising market outlook, the IPO is worth considering for those interested in participating in the expanding two-wheeler market.

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