Rappid Valves (India) coming with IPO to raise Rs 30.41 crore

20 Sep 2024 Evaluate

Rappid Valves (India)

  • Rappid Valves (India) is coming out with an initial public offering (IPO) of 13,69,800 equity shares in a price band Rs 210-222 per equity share.
  • The issue will open on September 23, 2024 and will close on September 25, 2024.
  • The shares will be listed on SME Platform of NSE.
  • The face value of the share is Rs 10 and is priced 21.00 times of its face value on the lower side and 22.20 times on the higher side.
  • Book running lead manager to the issue is Shreni Shares.
  • Compliance Officer for the issue is Nidhi Krutik Shah.

Profile of the company

Rappid Valves (India) recognized by its brand name ‘Rapid’ also known as ‘Rappid Valves’, being an Engineering Company, is primarily engaged in the manufacturing of Valve solutions. Its extensive product portfolio encompasses a vast range of valves which includes Ball valves, Gate Valves, Globe Valves, Butterfly Valves, Check Valves, Double Block valves, Strainer Valves and Marine Valves which are manufactured using ferrous and non-ferrous materials, sizes ranging from 15mm to 600mm catering to diverse requirement. The company commenced manufacturing operations at Genesis Industrial Complex, Village Kolgaon, Palghar (East), Thane, Maharashtra, property purchased in 2006. Its facilities are spread across 32,431.66 Sq. Ft. It has introduced various products which included Top Entry Ball Valve, Gate Valve Trunnion Mounted Ball Valves, SDNR, Quick Closing Valve, Automated Valves, Wafer Type Ball Valves & many more which are a sub-type of Ball valves, Gate Valves, Globe Valves, Butterfly Valves, Check Valves, Double Block valves, Strainer Valves and Marine Valves. 

The company has also been accredited with various quality certifications such as ISO 9001:2015, 14001:2015, ISO 45001: 2018. Through years of field application experience, it has designed products that meet the stringent requirements of today’s flow control in Industry. Quality & Reliability is an Integral part of its practice and culture that guides its actions to deliver Products and Services that are safe and in line of near Zero Emission Technology.

Further, to consolidate the business operations, the company recognized its Registered office and manufacturing unit at the same location. The manufacturing unit is equipped with comprehensive range of standard machineries, including conventional machines, automated CNC machines, automated VMC, automated test benches and EOT cranes, Center Lathe, Milling, Radial Drilling, Bench Grinder, Haksaw, Hardness tester, Lapping, Arc weld, Air Compressor, Buffing, CNC Super jobber, VMC, Crane, Pallet Truck Lifter, PMI Machine, Testing Machine, etc. to support a seamless manufacturing process. The facility ensures adherence to international standards to facilitate smooth assembly process and easy logistics suitable for carrying out its manufacturing operations smoothly and efficiently. By following necessary safety standards and conducting safety meetings, it tries to keep its workplace safe.

Proceed is being used for:

  • Funding the Capital expenditure for purchase of new Plant and Machineries and Software by the company
  • Expenditure for renovation of registered office and existing manufacturing unit
  • Repayment/prepayment of all or certain of its borrowings availed of by the company
  • Pursuing inorganic growth initiatives through acquisitions
  • General corporate purposes

Industry Overview

The Valves Market size is estimated at $79.90 billion in 2024, and is expected to reach $108.20 billion by 2029, growing at a CAGR of 6.25% during the forecast period (2024-2029). Valves control the flow and pressure within a system or process. It forms an essential piping system component that conveys liquids, gases, vapors, slurries, etc. Hence, the growing investment in infrastructure development and the automation of industries are driving the growth of the studied market. Rising investments in pipeline infrastructure in the oil and gas sector are expected to boost the installation of industrial valves. 

Meanwhile, the Global Marine Actuators and Valves Market is projected to grow at a CAGR value of 4.5% from 2022 to 2027. Actuators are mechanical devices in marine machinery that help in the starting and stopping mechanisms of marine transportation. Marine valves are a crucial component in ships and are useful in controlling the flow rate, direction, and pressure of the liquid flowing in the ship's pipeline. As per the OECD, the demand for global maritime transport would triple by 2050. Technological advancements in the workings of ships and cargo vessels are possible by upgrading to the latest changes in actuators and valves. Actuators and valves play a crucial role in the efficiency of marine transportation and are expected to gain attention due to the many advantages it provides to marine transportation. The market will be driven during the forecast period by increasing demand for maritime trade and transportation, tremendous growth in the manufacturing of ships and cargo vessels, and rising government expenditure on naval equipment and transport. Furthermore, the need for efficient marine transportation due to the high usage of maritime transport and the high demand for actuators and valves that help in efficiency and subsequently in reducing costs is the factor that will propel the market.

Naval vessels use valve & actuator extensively to efficiently operate various systems on-board a navy ship such as weapon release system, navigation system, and hydraulics system. Recently, US Navy awarded $982 million on 5-year contract to 40 companies for providing advanced systems for its underdevelopment unmanned surface vehicle (USV). Draper Laboratory (a not-for-profit research organization based in Massachusetts, US) is among 40 companies short listed by US Navy to develop actuator technology among other advanced technologies. Such R&D for marine actuators & valves for naval vessels is expected to boost the global marine actuators & valves market. Smooth actuator & valve operation is essential for maintenance of vessel piping system. Actuators and remote controlled valves have internal diagnostics that enable planned maintenance. Such actuator & valve system requires a low level of maintenance and are power efficient. Moreover, reduced maintenance provides cost benefits through reliable & efficient operation as well as reducing downtime. Such actuators & valves with low-maintenance requirement are expected to drive the global marine actuators & valves market.

Pros and strengths

Continuous focus on developing novel and innovative products: For any company, innovation and technical progress are key factors for its success in the long term. The company constantly encourages its people to innovate and develop new products for catering to demands of its customers. The company is in constant touch with its clients in order to assess their requirements for increasing their process efficiency. This has helped the company to become a Solution Provider and not just a manufacturing concern. 

Good Standing in marine Industry: The company understands the unique requirements of the marine sector and offers a wide range of valves specifically designed to meet the demanding conditions of marine applications. These valves are manufactured using innovative technologies and adhering to rigorous quality control standards, ensuring that every valve meets the highest industry standards. The company offers a comprehensive range of valves suitable for various marine applications, including ball valves side entry & top entry, gate valves, globe valves, check valves, butterfly valves etc. These valves are designed to withstand the harsh conditions of the marine environment, such as corrosion, high pressure, and extreme temperatures. Overall, Company’s expertise in the marine industry and their commitment to delivering the best quality valves make them a reliable partner for any marine project. 

Long standing relationship with key customers & suppliers: The company enjoys long standing relationship with key Customers & Suppliers. These long standing relationships are result of its commitment to quality, timely delivery, promptness in payments and adaptability etc. As on March 2024, 2023 and 2022, its top 10 customers were 87.76%, 90.90% and 99.80% of total revenue from operations and top 10 suppliers were 76.65%, 79.66% and 68.67% of total purchases. It has long-standing relationships with its customers for whom it has executed repeat orders over an extended period of time and also by offering them after sales services, which has been established and are strengthened by the dedicated infrastructure and its ability to meet Clients’ requirements for customized products.

Risks and concerns 

Maximum revenue comes from limited customers: The company derives a significant portion of its revenues from a limited number of large customers. The company’s top 10 customers accounted, cumulatively, for 87.76%, 90.90% and 99.80% of its revenue from operations for the Fiscals 2024, 2023 and 2022 respectively. While the company has not experienced any instances of discontinuation of the purchases from its ten largest customers by revenue in the past three Financial Years, but it cannot assure that it will be able to maintain or increase the revenues generated from such customers, or maintain or improve its relationships with them. Also, while it seeks to broaden its customer base, it cannot assure that, in the event of any loss of the business of such customers, it will be able to derive revenues from other customers.

Generate revenues from certain geographical regions: For the Financial year ended March 31, 2022, 2023 and 2024 its revenue from customers situated in Maharashtra contributed 40.66%, 86.20% and 63.97% respectively of its total revenue, there were no sales from New Delhi in the financial year 2022, however, it contributed 0.51% and 20.97% respectively of its total revenue and its customers situated in Gujarat contributed 48.81%, 6.89% and 2.84% of its total revenue as per its Audited Financial Statements. Such geographical concentration of its business in these regions heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions which may adversely affect its business prospects, financial conditions and results of operations. 

Geographical constrain for raw material procurement: The company sources its 100% raw materials from domestic market i.e. Gujarat and Maharashtra. This strategic decision allows it to benefit from the geographical advantages, ensuring timely delivery of all materials. For the Financial year ended March 31, 2022, 2023 and 2024, its raw material procurement from its suppliers situated in Gujarat contributed 66%, 62% and 53% respectively of its total turnover and its suppliers situated in Maharashtra contributed 33%, 38% and 47% respectively of its total turnover as per its Audited Financial Statements. Such geographical concentration of its business in these regions heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions which may adversely affect its business prospects, financial conditions and results of operations.

Outlook

Rappid Valves (India) primarily engages in the manufacturing of Valve solutions. The company offers various valves, including ball, gate, globe, butterfly, check, double block, filter, and marine valves. These valves are made using ferrous and non-ferrous materials and come in sizes ranging from 15mm to 600mm to meet diverse requirements. The company is in process of upgradation and expansion of manufacturing capabilities, also expanding geographical reach by establishing sales offices in Dahej, Ahmedabad, Pune, and Noida. On the concern side, the company derives a significant portion of its revenues from a limited number of customers. The loss of, or a significant reduction in the revenues it receives from, one or more of these customers, may adversely affect its business. Moreover, the company derives a significant portion of its revenue from Ball Valves, Gate Valves, Globe Valves, Butterfly Valves and Check valves, any reduction in demand or in the production of such products could have an adverse effect on its business, results of operations and financial condition.

The company is coming out with a maiden IPO of 13,69,800 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 210-222 per equity share. The aggregate size of the offer is around Rs 28.77 to Rs 30.41 crore based on lower and upper price band respectively. On performance front, revenue from operations for FY24 amounted to Rs 3,651.25 lakh while revenue for FY23 was Rs 1,639.91 lakh, a gain of 122.65%. Moreover, the profit after tax for FY24 was Rs 413.27 lakh representing 11.29% of total revenue as compared to Rs 45.56 lakh representing 2.77% of total revenue in FY23.

Continuously investing in its manufacturing capabilities is a strategic move for the company. By installing and accommodating new automated machines and other additional plant & machineries it will be able to achieve better operational efficiency. These automated machines, such as the vertical machining centre, CNC machines, flatbed CNC machines, and testing machines, will enhance its manufacturing processes and increase its production capacity. With these upgrades and expansions, it anticipates being able to expand its operations at current location, which will provide it with operational efficiency and support the growth of its business.

Peers
Company Name CMP
BHEL 241.50
Bharat Electronics 288.75
Thermax 4980.00
Kirloskar Oil Eng 1159.00
GMM Pfaudler 1390.95
View more..
© 2024 The Alchemists Ark Pvt. Ltd. All rights reserved. MoneyWorks4Me ® is a registered trademark of The Alchemists Ark Pvt.Ltd.