R K SWAMY Limited IPO – Get Date, Price, Review and Details

In this article, we will discuss:

• Business Overview
• The objective of the fresh issue
• Key Strengths
• Risks
• Financial Snapshot

Business Overview:

R K Swamy is one of the leading integrated marketing service groups in India, having more than five decades of experience offering a single-window solution for creative, media, data analytics, and market research services. It offers a wide range of services such as Integrated Marketing Communications, Customer Data Analytics and Marketing Technology, Full-Service Market Research, and Syndicated Studies. It is a data-driven integrated marketing services provider and all segments of its business use digital initiatives extensively. The company has grown its businesses organically based on the response to market trends, and client requirements progressively over the last five decades. Apart from establishing internal infrastructure for efficient delivery of services, it has well-established brands across segments with experienced promoters, and professional senior management. It has catered to over 4,000 client organizations over the years and has served over 475 clients in the Fiscal 2023 from 12 offices across 12 cities. It has a well-diversified client base covering leading brands engaged in multiple industries including Banking, Financial Services and Insurance, Automotive, Fast-Moving Consumer Goods, Consumer Durables, Retail, and E-Commerce. Its client portfolio includes multinational companies, public sector enterprises, central government ministries, private sector business groups, other private companies, and NGOs.

The objective of the fresh issue:

The company intends to utilize the net proceeds received towards the following objects:

• Funding capital expenditure for setting up a digital video content production studio.
• Funding investment in IT infrastructure development of the company, and the material subsidiaries, Hansa Research and Hansa Customer Equity.
• Funding setting up of new customer experience centers and computer-aided telephonic interview centers of the company.
• Funding the working capital requirements of the company.
• General corporate purposes.

Key Strengths:

• R K Swamy has focused on supporting the marketing activities of large corporates, state-owned enterprises, leading institutions and marketers, emerging Indian entrepreneurs and businesses. It is a scalable, asset-light business with a track record of profitability and healthy cash flows. The company is a leader in the business of market research with a 15-year track record in the Data Analytics and Marketing Technology segment, and a proven ability to produce digital content at scale.
• The Full Service Market Research business was approximately Rs. 29 billion in Fiscal 2023 and is expected to grow at a CAGR of 9-10% to approximately Rs. 43-48 billion by Fiscal 2028. It has a well-diversified customer base with long-standing relationships and enjoys a high customer retention rate. During Fiscal 2023 and the six months ending September 30, 2023, 84% and 94% of the revenues were derived from repeat customers.
• The company intends to invest in physical and operational infrastructure to increase its content creation capabilities and capitalize on growth opportunities in key sectors. With the offer proceeds, R K Swamy intends to build the necessary infrastructure through a fully-equipped production studio plus post-production facilities and focus on enabling high-quality production with a quick turnaround time. This investment will enhance its in-house production capabilities, reduce reliance on external productions, and lead to a reduction in outsourcing costs, which in turn will increase overall profits and revenues.

Risks:

• A significant portion of the company’s revenues is derived from key clients. For six months ending September 30, 2023, approximately 50% and 75% of the revenues were derived from the top ten clients and top 50 clients respectively. Failure to retain these clients would adversely affect the business, revenue growth, and financial condition of the company.
• A substantial portion of the company’s clients are concentrated in specific industry verticals. For six months ending September 30, 2023, R K Swamy derived 60% of its revenues from BFSI, Automotive, FMCG, Consumer Durables, Retail, and E-commerce sectors with BFSI leading the pact. Any decrease in demand for marketing services in these industry verticals could have a direct and immediate adverse effect on the company’s revenue from operations.
• Digital Marketing and Integrated Marketing Communications form a substantial part of its service offerings. Any changes in trend, decrease in digital advertisement or Integrated Marketing Communications spending by the company’s clients, inability to align the service portfolio with market trends and technological advancements, could have a material adverse effect on the business operations, revenue growth, and financial condition of the company.

Financial Snapshot: