The Royalarc Electrodes IPO is a significant event in the financial world, offering investors a chance to participate in a company that manufactures welding consumables used in critical industries such as railways, refineries, and shipyards. With a fresh issue of 18 lakh shares worth ₹21.6 Crores, and an offer for sale of 12 lakh shares totaling ₹14.4 Crores, this IPO presents an opportunity for both retail investors and HNIs to gain exposure to a growing sector.

The IPO's subscription period commenced on February 14, 2025, and will conclude on February 18, 2025. The share price band for the Royalarc Electrodes IPO is set between ₹114 and ₹120 per equity share. At the upper price band of ₹120, the company's market capitalisation is estimated at ₹133.20 Crores. The IPO has witnessed notable activity in its subscription status, with reports showing it was subscribed 1.55 times by February 18, 2025.

With a lot size of 1,200 shares, the minimum investment for retail investors is ₹1,44,000, and for HNIs, it is ₹2,88,000 for two lots. The shares are set to be listed on the NSE SME platform on or around February 24, 2025.

The Grey Market Premium (GMP) of the IPO is currently ₹0, suggesting no immediate price discovery in the unorganised market. While GMP trends are often used to gauge market sentiment, they do not always reflect the true value of the shares upon listing. This makes it important for investors to focus on the company's financial fundamentals rather than relying on speculative trading.

The financial performance of Royalarc Electrodes has shown steady growth, with revenues increasing from ₹6,482.23 Lakh in FY 2022 to ₹10,099.25 Lakh in FY 2023. For the period ended September 30, 2024, the company reported EBITDA of ₹568.56 Lakh, reflecting healthy profitability. The Profit After Tax (PAT) for the same period stood at ₹317.50 Lakh, underscoring the company's stable financial trajectory.

Investors will also be keen to understand the objectives of the IPO, with proceeds being used for expanding the company's manufacturing facility, funding working capital needs, and general corporate purposes. The company’s robust financial metrics, including a Return on Capital Employed (ROCE) of 37.73% and a Return on Equity (ROE) of 32.85% for FY24, suggest a well-managed operation with good potential for growth.

However, despite the positive financials, experts recommend avoiding the IPO for listing gains due to the lack of a significant Grey Market Premium and the company’s reliance on substantial funding for its expansion plans. With a pre-issue P/E ratio of 9.36x and a post-issue P/E ratio of 11.17x, the company is priced fairly, but it remains to be seen how the stock will perform after listing.

As we approach the allotment date on February 20, 2025, investors can check their allotment status through the registrar’s website by entering their application number, PAN, or DP Client ID. This will be crucial for those who wish to understand their standing in this highly anticipated IPO.

In summary, the Royalarc Electrodes IPO offers a unique opportunity to invest in a company poised for growth in the welding consumables market. However, investors should weigh the pros and cons, keeping in mind the company's financial health and the market’s speculative nature. As the listing date nears, staying updated on subscription trends, GMP, and financial metrics will be vital for making informed decisions.

The Upcoming IPOs in this week and coming weeks are Swasth Foodtech, Beezaasan Explotech, HP Telecom India.

The Current active IPO are Royalarc Electrodes, Tejas Cargo India, Quality Power Electrical Equipments.

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