2024-07-03 12:45:02
The company will sell its shares at a fixed price band of ₹243-256 apiece, where investors can bid for 58 shares in one lot and in multiples thereafter.
Bansal Wire IPO review
Anand Rathi: Subscribe – Long Term
The brokerage firm in a note said that Bansal Wire serves a customer base of over 5,000 clients across various industrial sectors. The company’s P/E (price-to-earnings) ratio is 50.8 times based on its FY24 earnings, with a market capitalisation of ₹4,007.8 crore after the issuance of equity shares and a market cap-to-sales ratio of 1.62 times its FY24 earnings.
“The company and its subsidiary, Bansal Steel & Power Limited, offer one of India’s most extensive steel wire product portfolios, with over 3,000 SKUs across high carbon steel, mild steel (low carbon), and stainless-steel wires. The Company offers around 2,000 SKUs, while the subsidiary provides approximately 1,500 SKUs.”
Looking at these factors, Anand Rathi analysts have recommended a ‘Subscribe – Long Term’ rating to the IPO.
SBI Securities: According to the broking firm, Bansal Wire is valued at FY24 annualised Enterprise Value to EBITDA (EV/EBITDA) multiple of 27.3 times, based on the upper price band on the post-issue capital.
“The company delivered robust revenue CAGR of 20.3% for FY18-FY23. It offers a comprehensive product suite of 3,000+ SKUs across different wire categories with good mix of high volume and better margin products. The company is setting up India’s largest manufacturing plant in Dadri with total steel wire capacity of 3,46,000 mtpa and will commence operations in phases with the entire capacity to be installed by mid of FY26,” it noted.
Risk Factors
– Disruption in supply of raw material: The company relies on its top 10 suppliers of the raw material and work-in progress goods used in its manufacturing processes. Any shortages, delay or disruption in the supply of the raw materials may have a material adverse effect on its business, financial condition, results of operations and cash flows.
– Volatility in costs of raw materials: The costs of raw materials that the company uses in its manufacturing process are subject to volatility and any increases or fluctuations in raw material prices, may have a material adverse effect on its business operations.
– Downturn in steel wires market
: The company is dependent on the performance of the steel wires market and any adverse changes in the condition affecting the steel wires market can adversely impact its business, financial condition and prospects.
– Changes in arrangements with global representatives: The company’s distribution to the overseas market is dependent on 14 of its global representatives and any significant changes to the business arrangements with these representatives may impact on its results of operations, cash flow and financial condition.
Bansal Wire IPO GMP
Ahead of the issue opening for subscription, the grey market premium (GMP) of the company stood at ₹66.
The grey market is an unofficial ecosystem where shares start trading before the allotment in the IPO and continue till the listing day. Most investors track the GMP to get an idea of the listing price.
Bansal Wire IPO details
The public offer consists completely a fresh issue of equity shares worth ₹745 crore, with no offer-for-sale (OFS) component.
As much as 50% of the issue size has been set aside for qualified institutional investors (QIBs), 35% for retail investors and the rest 15% for non-institutional investors.
The funds mopped up will be utilised for the payment of debt, to support the working capital requirements of the company, and for general corporate purposes.
Bansal Wire Industries manufactures and exports steel wires. The company operates in three broad segments — high carbon steel wire, mild steel wire (low carbon steel wire) and stainless steel wire.
Additionally, the company plans to add a new segment of specialty wires through its upcoming plant in Dadri, which will help it grow and expand its market presence in the upcoming fiscals.
Its total income increased at a CAGR of 28% to ₹2,422.56 crore in fiscal 2023 from ₹1,480.41 crore in fiscal 2021, and profit after tax (PAT) rose at a compound annual growth rate (CAGR) of 21.7% to ₹59.93 crore in fiscal 2023, from ₹40.46 crore in fiscal 2021.
SBI Capital Markets and DAM Capital Advisors are the book running lead managers to the issue.
The allotment for the Bansal Wire IPO is expected to be finalised on July 8, 2024. The stock will be listed on BSE, NSE with tentative listing date fixed as July 10, 2024.
