Ricoh India - Delisting Offer Price - Still a long way - Nirmal Bang

Ricoh India has received a voluntary delisting proposal from Ricoh Asia Pacific Pte Ltd. its promoter company. We believe the delisting price which will be determined through Reverse Book Building process will be considerably higher compared to the CMP on account of improved performance of company in lieu of launch of wide array of products and aggressive marketing strategies. We feel the price determined through reverse book building process should be around Rs.89 which is 12 times FY14 EPS. The delisting process should take 6-8 months and our target price of Rs. 89 per share can generate 22% return from CMP of Rs. 73 in this period.

Investment Rationale

Strong Parentage

Ricoh India Limited is owned by Ricoh company Limited Japan with 73.6% holding in the company. Ricoh Company Japan is a global leader in sophisticated office solutions. The company deals in wide array of products includes copiers, multifunctional and other printers, facsimiles, duplicators and related consumables and services, as well as digital cameras and advanced electronic devices. Ricoh Japan is number one in the global A3 MFP (Multi Function Printers) and operates in around 180 countries. Ricoh Japan has global sales of $24.14 bn and market capitalization of $6.05bn.

The strong parentage of Ricoh Japan is an assurance for the launch of innovative products and with new found focus in Indian operation will drive the top-line growth going forward.

Renewed focus of Ricoh Japan in India

Ricoh Japan is operating since 1993 in India but had remained low profile till recent past. In last year Ricoh has become more aggressive with new product launches, expansion of distribution network and brand building. The impact of same is also visible in FY12 and Q1FY13 financial performance where the revenue has grown by 45% and 56% respectively.

Ricoh Japan has renewed its focus on Indian market and this delisting process could be part of the overall strategy.

Delisting of Ricoh India

Ricoh India has received a delisting proposal from Ricoh Asia Pacific Pte Ltd to acquire the public shareholding of 26.4% or 10497791 shares.

The Floor price is Rs. 53.79 per share. The process of acquisition of share is through Reverse Book building. Acording to us delisting process should take 6-8 months as the company will require:

1) Shareholder Approval
2) FIPB Approval
3) SEBI Approval

At current market price Ricoh Asia Pacific has to spend Rs.76cr or $14mn to delist the share.

We believe the delisting price which will be determined through Reverse Book building process will be considerably higher compared to the CMP on account of improved performance of company in lieu of launch of wide array of products and aggressive marketing strategies.

We believe the delisting price which will be determined through Reverse Book Building process will be considerably higher compared to the CMP on account of improved performance of company in lieu of launch of wide array of products and aggressive marketing strategies. We feel the price determined through reverse book building process should be around Rs. 89 which is 12 times FY14E EPS. The delisting process should take 6-8 months and our target price of Rs. 89 per share can generate 22% return from CMP of Rs. 73 in this period.

Source : Equity Bulls

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