A new mainboard IPO, Regal Resources, is set to open next week. This article provides a detailed overview of the company’s valuation, key dates, grey market premium (GMP) momentum, and potential listing gains, based on available information.
Regal Resources IPO Key Dates
The Regal Resources IPO is scheduled to open for subscription on August 12th. Investors will have three days to apply:
- Opening Date: August 12th
- Day 2 for Application: August 13th
- Closing Date: August 14th
- Anchor Investor Allocation: Late night on August 11th
- Allotment Status: August 18th
- Refunds/Demat Account Credit: August 19th
- Listing Date (BSE & NSE): August 20th
Investors should consider market volatility when planning their application.
Price Band and Lot Details
Regal Resources has set a face value of ₹5 per equity share. The price band for the IPO is:
- Lower Price Band: ₹96 per share
- Upper Price Band (Cut-off Price): ₹102 per share
To ensure a successful allotment, applicants must apply at the cut-off price of ₹102 per share. The minimum application lot size is 144 equity shares.
Issue Size and Structure
The total issue size of the Regal Resources IPO is ₹306 crore. This includes both a fresh issue and an Offer For Sale (OFS):
- Fresh Issue: ₹210 crore. These funds will directly go to the company.
- Offer For Sale (OFS): ₹96 crore. This portion allows promoters and existing shareholders to sell their stake.
This is a book-building IPO, and the company will list on both BSE and NSE. The issue distribution is as follows:
- Qualified Institutional Buyers (QIBs): 50% of the total issue size (including Anchor Investors).
- Retail Investors: 35% of the total issue size.
- High Net Worth Individuals (HNIs): 15% of the total issue size.
The subscription numbers from QIBs and the names of anchor investors will be crucial indicators for the IPO’s performance and long-term potential.
Minimum Application Amounts
To apply for the Regal Resources IPO, the minimum amounts required are:
- Minimum (1 Lot): ₹14,688
- Small HNI Category: Approximately ₹2,56,320
- Big HNI Category: Approximately ₹13,472 (Note: This figure for Big HNI seems unusually low, but is stated in the transcript.)
Financial Performance
Regal Resources has provided financial data for FY23, FY24, and FY25 (12 months each). The company has shown consistent growth across key metrics:
- Total Assets: Increased from ₹372 crore (FY23) to ₹586 crore (FY24), and further to ₹860 crore (FY25).
- Total Income: Grew from ₹488 crore (FY23) to ₹601 crore (FY24), reaching ₹917 crore (FY25).
- Profit: Increased from ₹17 crore (FY23) to ₹24 crore (FY24), and significantly to ₹47.637 crore (FY25).
- EBITDA: Rose from ₹41 crore (FY23) to ₹56 crore (FY24), and then to ₹113 crore (FY25).
- Net Worth: Increased from ₹105 crore (FY23) to ₹126 crore (FY24), and to ₹235 crore (FY25).
- Reserves & Surplus: Grew from ₹103 crore (FY23) to ₹125 crore (FY24), and to ₹202 crore (FY25).
- Total Borrowing: Showed fluctuations, moving from ₹89 crore (FY23) to ₹357 crore (FY24), and then decreasing to ₹57 crore (FY25).
Valuation and Concerns
While the company has demonstrated strong financial growth, some aspects of its balance sheet and valuation warrant attention:
- Debt-to-Equity Ratio: The company’s debt-to-equity ratio is currently above 2, which is considered a negative point. A ratio below 1 or close to zero is generally preferred. High debt can add risk, especially during supply chain disruptions or market downturns. However, the company plans to use a portion of the fresh issue funds to reduce its debt.
- Return on Equity (ROE): The ROE is around 20%, which is above the 15% benchmark for the sector.
- Return on Capital Employed (ROCE): The ROCE is approximately 14.17%, slightly below the 15% target.
- Return on Net Worth: Previously 20%, it was later 5.19%.
- EBITDA: 12.32%.
- Price-to-Book Value: 6.18.
- Price-to-Earnings (P/E) Ratio: The P/E ratio is 22, compared to a pre-IPO P/E of 18.
- Overall Valuation: While the company’s valuation appears somewhat cheaper compared to its peer competitors, current market volatility and uncertainty suggest a “wait and watch” approach.
Use of Fresh Issue Proceeds
Out of the fresh issue amount, ₹159 crore will be specifically utilized to reduce the company’s existing debt. The remaining funds will be allocated for general corporate purposes. This debt reduction is expected to help control the debt-to-equity ratio in the future.
Grey Market Premium (GMP) and Listing Gain Expectations
As per current market trends, the Grey Market Premium (GMP) for Regal Resources IPO is ₹22. Based on this, the expected listing details are:
- Expected Listing Price: ₹124 (Cut-off price ₹102 + GMP ₹22)
- Expected Listing Gain: Approximately 22%
- Estimated Listing Gain per Lot: Approximately ₹3,168 (144 shares * ₹22)
For larger applications in the Small HNI or Big HNI categories (up to 2 lakh shares allocation), a listing gain above ₹400 based on the GMP is anticipated.
Considering the market’s current volatility, monitoring the IPO’s subscription levels on the first and second days will be important to gauge its potential performance.
