RK Swamy IPO Day 2: Check GMP, subscription status, review, key dates, more. Should you subscribe or not?

RK Swamy IPO opened for subscription on Monday, March 4, and will close on Wednesday, March 6. RK Swamy IPO got off to an impressive start on its first day of opening. RK Swamy IPO subscription status was 2.19 times, as per BSE data, on the first day. Within the first hour of opening, the retail portion was fully booked, and at the end of the day, the retail investor portion was booked 7.87 times.

Also Read: RK Swamy IPO: Here are 10 key risks from the RHP you should know before subscribing

The IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors. The employee portion has been reserved equity shares aggregating up to ₹7.50 crores. The employee discount comes in at ₹27 per share.

The price band has been fixed in the range of ₹270 to ₹288 per equity share of the face value of ₹5. RK Swamy IPO lot size is 50 equity shares and in multiples of 50 equity shares thereafter.

Also Read: RK Swamy IPO: Issue subscribed 2.19 times on day 1 led by retail investors; check GMP

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R K Swamy is an integrated marketing services provider that is data-driven and heavily relies on digital efforts for all aspects of its operations.

On Monday, Group CEO and Whole Time Director Narasimhan Krishnaswamy said in an interview with CNBC-TV18 that their company has been boostrapped for the past 50 years and that they now need to accelerate and reset.

Krishnaswamy clarified in the interview that their revenue usually comes from H1 at 40% and H2 at 60%. The gross margin approaches 68%. The expanding clientele, new business, and regional expansion strategies will propel growth. In general, the margin is higher in H2. Updates to the technology will increase operational effectiveness.

RK Swamy IPO Subscription Status 

The issue continues to receive heavy interest from its retail portion on the second day. RK Swamy IPO subscription status on day was 6.01 times, as per BSE data. The retail portion has bee subscribed 18.31 times, Non Institutional Investors has been booked 9.71 times, Qualified Institutional Buyers (QIB) portion is booked 37%. The employee portion has been subscribed 1.43 times.

RK Swamy IPO has received bids for 4,95,17,450 shares against 82,32,946 shares on offer, according to data from the BSE.

Also Read: RK Swamy IPO fully subscribed: GMP, review, subscription status, price, date, other details. Apply or not?

RK Swamy IPO details

RK Swamy IPO comprises a fresh issue of ₹173 crore, and an offer-for-sale (OFS) of up to 8,700,000 equity shares of face value of ₹5 each by the promoters and other investors.

The selling shareholders are Srinivasan K Swamy (will offload 1,788,093 equity shares), Narasimhan Krishnaswamy (will offload 1,788,093 equity shares), Evanston Pioneer Fund L.P. (will offload 4,445,714 equity shares), and Prem Marketing Ventures LLP (will offload 678,100 equity shares).

The net proceeds of the fresh issue are expected to be used for the following: financing the company's working capital needs; financing capital expenditures that the company will incur to establish a digital video content production studio; financing investments in the development of the company's IT infrastructure and that of its Material Subsidiaries, Hansa Research and Hansa Customer Equity; financing the establishment of new customer experience centres and computer-aided telephone interview centres; and financing general corporate purposes.

The book running lead managers of the R K SWAMY IPO are SBI Capital Markets Limited, Iifl Securities Ltd, and Motilal Oswal Investment Advisors Limited. The issue's registrar is Kfin Technologies Limited.

RK Swamy IPO GMP today

RK Swamy IPO GMP or grey market premium is +90. This indicates RK Swamy share price were trading at a premium of ₹90 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of RK Swamy share price was indicated at ₹378 apiece, which is 31.25% higher than the IPO price of ₹288.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Also Read: RK Swamy IPO: Here are 10 key risks from the RHP you should know before subscribing

RK Swamy IPO Review

Reliance Securities

According to the brokerage, RK Swamy longstanding customer relationships with government companies and agencies to create awareness about its policies, promote various new initiatives, health and educations schemes, state wise marketing services are the key positives.

"Its strong management helps to tap domestic and global customers in various segments of industries as private companies spend around 3% of their revenues for product endorsement which will drive sustained growth for the coming years.

We believe with improvement in margins, newer cities and innovative campaigns in digital medium improving the overall customer experience helps to build brands leveraging the success for clients. Hence, we recommend to “SUBSCRIBE” the issue for long term," the brokerage said.

Canara Bank Securities Ltd

The brokerage emphasised that R K Swamy Limited provides a wide range of services, such as media, creative, data analytics, and market research. Ranking among the top ten diverse integrated marketing communications service groups in India, it offers a one-stop shop for integrated marketing communications, full-service market research, and customer data analytics and marketing technology.

"The company’s top line increased at a CAGR of 19% form FY 21. For FY23, the EBITA and PAT margins are to be 20.97% and 10.68%, respectively. For FY23, ROE and ROCE are 22.20% and 28.95%, respectively.

The company is raising funds for setting up studio with post production facilities, auto marketing platform and data repository platform. The company’s P/E is valued at 40.96x for FY23. The annualized P/E for FY24 stands at 80x which appears expensive while H2FY2024 contributes 60-65% of company’s earnings. We recommend to subscribe for listing gains," the brokerage said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.