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Alpha | Rolex Rings Ltd. – Equity Research Desk

November 12, 2022 . Equities Desk

Alpha . Equity Research

Rolex Rings Ltd. – Bearing Component Maker

Rajkot-based (Gujarat), RRL (Rolex Rings Private Limited) was established as a partnership firm by Mr. Rupesh D. Madeka in 1980 and later on reconstituted as a public limited company in 2021 and is presently managed by Mr.Manesh D. Madeka and family. RRL is engaged in manufacturing (forging and machining) bearing rings and auto components like engine parts, transmission parts, exhaust system parts, chassis parts, etc. It caters primarily to the requirement of the automobile sector and has a reputed clientele comprising global and domestic auto-component manufacturers. The company has three manufacturing units that are all in Rajkot with an annual achievable capacity of 144,750 MTPA in forging and 70 mn parts per annum in machining.

Valuation:

Rolex Rings has posted superior financial performance over the last three years and reduced debt by around 40% led by strong free cash flow generation. It delivered attractive return ratios driven by high margins. Hence, we recommend a BUY rating in the stock with a target price (TP) of Rs.2275, 40x FY24E EPS.