RK Swamy Shares List At 13% Discount To IPO Price; Should You Buy, Sell Or Hold?

RK Swamy’s Rs 423.56 crore initial public offering (IPO) witnessed a negative debut on the exchanges on Tuesday, March 12. The shares of marketing services provider RK Swamy listed at a discount of 13.2% on the exchanges on Tuesday. The stock was listed at Rs 250 on NSE as against an issue price of Rs 288. Meanwhile, the stock listed at Rs 252, down 12.5% on BSE.

Ahead of the listing, the company’s shares have had no GMP in the unlisted market.

RK Swamy IPO subscription status

The IPO of RK Swamy was subscribed about 25.78 times on the third and final day of the bidding process. The issue received consolidated share bids of over 21.22 crore over the three-day issue period against 8,232,946 shares available for subscription. The retail category was booked 33.31 times while the non-institutional investors’ quota was picked 34.24 times. The quota for qualified institutional buyers (QIB) was subscribed 20.58 times.

RK Swamy IPO price band

The company sold its shares in the range of Rs 270-288 per share for its Rs 423-crore IPO. At the upper band price, the total issue size will be at Rs 423 crore and the total market capitalisation of the company is pegged at Rs 1,450 crore.

RK Swamy IPO size

The IPO was a mix of fresh shares worth Rs 173 crore, and an offer-for-sale (OFS) of 87 lakh equity shares by promoters and investors.

Promoters Srinivasan K Swamy, and Narasimhan Krishnaswamy sold 17.88 lakh equity shares each in the OFS, while investors Evanston Pioneer Fund LP offloaded 44.45 lakh equity shares and Prem Marketing Ventures LLP 6.78 lakh equity shares via the OFS.

The promoters own 84.44% shares in RK Swamy, and the rest 15.56% shares are held by the selling public shareholders Evanston Pioneer Fund LP, and Prem Marketing Ventures LLP. Prem Marketing Ventures LLP will be exiting the marketing services provider after the issue.

What Should Investors Do Now?

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd., said: “RK Swamy Limited (RKSL), a prominent integrated marketing services company, witnessed a lackluster debut on the stock exchanges, listing at Rs. 251 per share. This translates to a concerning 13% decline from its issue price of Rs. 288, significantly lower than pre-listing expectations of even a flat listing. The pre-listing grey market premium (GMP) was around Rs. 0 thus this is a weaker-than-anticipated performance.”

“The muted pre-listing GMP and negative listing indicate a cautious investor approach, possibly due to volatile market conditions or concerns about competition and working capital requirements. This negative listing presents a challenge. Investors are advised to evaluate their risk tolerance before making any decisions,” he added.

Dhruv Mudaraddi of StoxBox said the company, with an integrated marketing services approach, is strategically positioned to capitalise on the country’s burgeoning digital infrastructure growth spurred by initiatives such as the ‘Digital India’ campaign and the expansion of 4G and 5G networks.

“Our sense is that the inherent nature of the digital marketing analytics business is such that it entails higher initial risk followed by a phased replication model upon successful rollout,” he said.

Mudaraddi advised investors who have received allotment to hold shares from a medium to long term perspective.