Royalarc Electrodes makes tepid debut; shares list at ₹120 per share on NSE SME platform

Royalarc Electrodes Ltd made a lacklustre debut on Monday, February 24, with its shares listing flat on the NSE SME platform. The stock opened at ₹120 apiece, the same as its IPO price.

However, soon after listing shares of Royalarc Electrodes Ltd rallied 2% to an intraday high of ₹122.4 apiece.

More than 4.5 lakh equity shares changed hands on the NSE SME platform. The total turnover stood at ₹5.41 crore within the initial 15 minutes of trade. The company's market valuation stood at ₹134.31 crore.

At the listing price of ₹120 per share, the investors would not have made any gains compared to the minimum investment of ₹1,44,000 at the upper price band of the IPO for a single lot size of 1,200 shares. The stock was trading 1.04% higher at ₹121.25 apiece on the NSE at around 10:25 am.

The welding products maker launched its IPO from February 14 to February 18 to raise ₹36 crore from public investors. The SME IPO comprised a fresh sale of 18 lakh shares, worth ₹21.6 crore, and an Offer-For-Sale portion of 12 lakh shares, amounting to ₹14.4 crore. The IPO price band was fixed at ₹114 to ₹120 per share.

The IPO received a decent response from investors. On the final day, it was subscribed 1.67 times overall. Applications for over 33.52 lakh shares were received compared to the 20.06 lakh shares on offer.

The retail portion was subscribed 2.2 times and the Non-Institutional Investors’ quota 1.26 times. The Qualified Intuitional Buyers (QIBs) segment was also fully booked.

The IPO allotment status was finalised on February 19. Fedex Securities Pvt Ltd was the book-running lead manager of the Royalarc Electrodes IPO. Kfin Technologies Limited was the issue registrar.

Royalarc Electrodes Ltd manufactures welding products such as electrodes, MIG/TIG wires, and flux-cored wire. These products are used to make equipment like boilers, heavy structures, tanks, pipes, beams, and pressure vessels, which have applications in various sectors such as railways, airport infrastructure, roadways, shipyards, sugar industries, refineries, thermal power stations, and telecom sectors, among others.

Royalarc Electrodes also trades in ancillary products like welding flux cored wire, wheels, electro slag strip cladding and others.

The company has a manufacturing plant at Zaroli in Umbergaon Valsad, Gujarat. It sells products in the domestic and overseas markets and ships to more than 20 countries.

The company has proposed to utilise funds for the expansion of its manufacturing facility and meeting working capital needs. A sum of ₹4.88 crore would be used for expanding its manufacturing facility in Gujarat. Around ₹14 crore would be used for meeting working capital requirements and the rest for general corporate purposes.

Royalarc Electrodes Ltd key financials

Royalarc Electrodes had a profit after tax of ₹3.17 crore in the April-September period of FY 2024-25, while revenue from operations was ₹45.6 crore in the six-month period.

Its revenue stood at ₹99.78 crore in the year ended on March 31, 2024, against ₹96.94 crore in the previous financial year (FY23). The company’s profit after tax stood at ₹11.92 crore in FY24 compared to ₹9.56 crore in the preceding financial year.