R K Swamy Ltd IPO

The largest integrated marketing services provider in India, R K Swamy Ltd is preparing to launch its IPO and has filed its Draft Red Herring Prospectus (DRHP) with SEBI. The Chennai-based company has proposed a fresh issue as well as an offer-for-sale (OFS) in its offer document. It has proposed to make a fresh issue of approximately Rs. 215 crore and an OFS of up to 87,00,000 equity shares.

If you are looking forward to being a part of the growing marketing service industry, you can consider investing in the R K Swamy Ltd IPO. Read along to get more insights about the same.

Also Read: How does an IPO work?

About the Company

R K Swamy Ltd is the largest integrated marketing services provider and it is among the top integrated marketing communications services groups in the country. The company offers a single window service and solutions for media, data analytics, creative and market research-oriented services. 

It has a wide range of services in business segments like customer data analytics and marketing technology, integrated marketing communications, full-service market research and syndicated studies. 

It has some of the biggest names in its clientele like Aditya Birla Sun Life AMC, ICICI Prudential Life Insurance, Royal Enfield (a brand of Eicher Motors), Hindustan Petroleum Corporation, Mahindra and Mahindra Ltd and many more.

IPO Details and Objectives

R K Swamy Ltd is preparing to launch its IPO which is going to be the first ever IPO by an Indian integrated marketing service provider. The proposed issue will be a fresh issue and an offer for sale (OFS). The fresh issue will fetch the company around Rs. 215 crore. The objectives of this fresh issue are:

• To fund its massive working capital requirements.
• To fund capital expenditure, specifically to set up a digital video content production studio
• Making significant investments in its IT infrastructure and material subsidiaries
• Provide funds for setting up new computer-aided telephonic interview centres and customer experience centres 
• For general corporate purposes

The OFS is an offering of 8.7 million equity shares by promoters and shareholders, namely Narasimhan Krishnaswamy, Srinivasan K Swamy, Prem Marketing Ventures LLP and Evanston Pioneer Fund LP. The company will not receive any proceeds from this offer-for-sale. Only the selling shareholders i.e. promoters and investor shareholders will be entitled to the net proceeds after paying out the offer-related costs. 

The book-running lead managers of this IPO will be IIFL Securities, SBI Capital Markets and Motilal Oswal Investment Advisors. KFin Technologies Limited will be the registrar of the RK Swamy Ltd IPO.

Company Financials 

Here is the financial summary of R K Swamy Ltd over the last three fiscal years.

Particulars	For the Financial Year Ending (In Rs. Millions Except EPS)
	March 31, 2023	March 31, 2022	March 31, 2021
Total Assets	3,136.52	4,064.41	3,900.59
Total Liabilities	2,684.21	3,900.92	3,867.59
Total Expenses	2,370.07	2,005.49	1,543.94
Total Revenue	2,999.13	2,449.71	1,832.20
Profit/Loss After Tax	312.58	192.55	30.77
EBITDA	629.06	444.22	288.26
EPS (Basic and Diluted)	7.03	4.33	0.69

Strengths of the Company

R K Swamy Ltd has the following competitive strengths which set it apart from its competitors and other market players. These are:

• RK Swamy has been serving the top industry leaders with quality marketing and research-oriented services for over five decades. Moreover, it is focused on supporting state-owned organisations, and emerging Indian entrepreneurs with data architecture consulting, analytics, qualitative and quantitative studies for consumer insights, etc.
• The promoter and the board of directors of this company possess tremendous industry knowledge and experience. Furthermore, promoters are supported by highly skilled senior management teams, who are highly experienced and each of these members is capable of bringing immense value to the company.
• The marketing company has a well-diversified customer base with decades of long and well-established relationships. As its customer base is not all sector-centric, any negative impact on any one of the sectors could easily be balanced out by the rest.
• RK Swamy Ltd has an organised and well-established internal infrastructure to ensure timely and error-free deliveries. Its India-based in-house team is also capable of providing support to any of its offices situated abroad.

Risks Involved

The major risk factors associated with the business activities of R K Swamy Ltd are:

• R K Swamy has diversified its client base, but it is still dependent on a few key clients. It might directly impact the marketing company’s profitability, operations, and cash flows if it fails to retain these clients or if these clients reduce their marketing budget.
• As this line of business is closely related to digital marketing, any decrease in market trends could lead to a decrease in digital marketing spending. This could have an adverse effect on the company’s overall profitability.
• Any delays or defaults in client payments may have a negative impact on RK Swamy’s operations, cash flows and revenues.

Also Read: IPO investment strategy

Summary

R K Swamy Ltd is among the top integrated marketing service companies in the country. It is preparing to launch its IPO and has filed its DRHP with SEBI to fund its capital expenditures and working capital requirements with the fresh issue proceeds. 

Considering its strengths, risk factors, and financials can you make an informed decision. Keep an eye on our website to get updates on the same.

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