Bansal Wire Industries IPO: Analyst recommendations, GMP, anchor book & more

The initial public offering (IPO) of Bansal Wire Industries opens for bidding today, that is, Wednesday, July 3. Investors can apply for the issue in the fixed price band of Rs 243-256 apiece. A minimum of 58 equity shares can be applied and its multiples thereafter, until Friday, July 5.
 

Bansal Wire Industries, which incorporated in December 1985, is a stainless-steel wire manufacturing company. The company operates in three main segments including high carbon steel wire, low carbon steel wire (mild steel wire), and stainless-steel wire. The company makes over 3,000 different types of steel wire products.
 

The Rs 745 crore IPO of Bansal Wire Industries is entirely a sale of 29,101,562 fresh equity shares. The net proceeds from the issue shall be utilized towards repayment or prepayment of all or a portion of certain outstanding borrowings availed by the company; funding the working capital requirements and general corporate purposes.
 

New Delhi-based Bansal Wire Industries raised Rs 223.5 crore through anchor investors as it allocated 87,30,468 equity shares at a price of Rs 256 apiece. SBI Mutual Fund (MF), HDFC MF, Kotak Mahindra M, Eastspring Investments, Optimix Wholesale Global Emerging Markets Share Trust, HSBC MF and Edelweiss Trusteeship participated in the anchor book.
 

Bansal Wire has more than 5,000 customers in different industries. The company exports products to over 50 countries. It has 14 global representatives in Bangladesh, Brazil, France, Germany, Israel, Italy, Netherlands, South Korea, South Africa, Sri Lanka, Turkey, the United Kingdom, the United States, and Vietnam. It has four manufacturing units, Ghaziabad and Bahadurgarh.
 

The company has reserved  50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
 

SBI Capital Markets and DAM Capital Advisors (Formerly IDFC Securities) are the book running lead managers of the Bansal Wire IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Wednesday, July 10 as the tentative date of listing. Here’s what a host of brokerage firms say about the IPO of Bansal Wire Industries:
 

Nirmal Bang Securities
Rating: Subscribe
Bansal Wire’s revenue has increased at a CAGR of 5.9 per cent from FY22-24, and Ebitda and PAT have increased at 16.6 per cent and 16.2per cent, respectively. Also, its EBITDA and PAT margins are increasing over the years with decent ROCE’s and ROEs with respect to industry. It is more than doubling its capacity, focusing on higher value-added products and exports, said Nirmal Bang.
 

“The company is currently trading at EV/EBITDA of 29.8x based on FY24 Ebitda. The industry average is 25.4x. It may look expensive on historical earnings but looking at the capacity expansion in near term with focus on high margin product and debt reduction we expect earnings to grow much faster in near term,” added Nirmal Bang Securities. with a ‘subscribe’ rating.
 

Arihant Capital Markets
Rating: Subscribe for listing gains
The company’s dominant 20 per cent market share in stainless steel wire with revenue of Rs 2,444.72 crore in FY24, and 3.19 per cent PAT margin demonstrate its market position and financial performance, said Arihant Capital Markets with a ‘subscribe for listing gains’ rating for the IPO.
 

“The expansion plans, including India’s largest wire facility, coupled with entry into new markets and the B2C segment, signal growth potential. Post-IPO P/E of 50.86 times with an EPS of Rs5 .03. The company anticipated to reap benefits of new capacity addition,” it added.
 

Reliance Securities
Rating: Subscribe
Bansal Wire is one of the reputed brands in the steel wire industry with a strong track record of 10-year revenues growth of 18 per cent CAGR with stable margins serving more than 10 industries and access to over 5000 customer base. It has consistently grown over the years with regular capacity with new innovative products moving up the value chain across various industries, said Reliance Securities.
 

“It operates on a cost plus model with an efficient working capital cycle managing its raw material input price fluctuations and multi-pronged approach to drive margins entering specialty wire segment through its new Dadri plant will increase volumes and customer expansion in other industries and geographies improving the overall profitability in the coming years,” it added with a ‘subscribe’ tag.
 

Swastika Investmart
Rating: Subscribe with caution
Bansal Wire has a comprehensive product portfolio of over 3,000 SKUs, the company offers a favorable mix of high-volume and higher-margin products, contributing to a stable and consistent margin profile. Bansal Wire’s financial performance has been positive, demonstrating consistent growth in both revenue and profitability, said Swastika Investmart.
 

“However, the company’s operations are susceptible to fluctuations in raw material supply and costs due to the inherent volatility of the steel market. Additionally, the steel wire industry is highly competitive and fragmented, presenting challenges for market share expansion. The IPO is aggressively priced,” it added with investors with high risk to apply for the issue.
 

Anand Rathi Research
Rating: Subscribe for long term
Bansal Wire Industries Limited Steel wire manufacturers generating a revenue of ₹24,660.3 million in Fiscal 2024, possessing an established market position and strong brand equity. The company serves a customer base of over 5,000 clients across various industrial sectors. The Company offers around 2,000 SKUs, while the subsidiary provides approximately 1,500 SKUs, said Anand Rathi Research
 

“The company’s P/E ratio is 50.8 times based on its FY24 earnings, with a market capitalization of Rs 4,007.83 crore after the issuance of equity shares and a market cap-to-sales ratio of 1.62 times its FY24 earnings. Its subsidiary, Bansal Steel & Power, offers one of India’s most extensive steel wire product portfolios, with over 3,000 SKUs across high carbon steel, mild steel and stainless-steel wires,” it added with a ‘subscribe for long term’ rating.
 

Sushil Finance
Rating: Subscribe
Bansal Wire is asking for a PE multiple of 41.4 times on the upper end of the price band and using diluted EPS for FY24 at Rs 6.18. The industry average is 32.72 times. The P/BV is at 7.72 times for FY24. Looking at all the factors, risks, opportunities and a high valuation, investors may subscribe to the issue with a medium to long-term view, said Sushil Finance.
 

 

 

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