Bansal Wire IPO Day 1: Witnessing strong buying interest from retail as well as non-institutional investors, the ₹745 crore initial public offering (IPO) of Bansal Wire Industries was fully subscribed on the first day of subscription on Wednesday.
The issue opened for subscription on Wednesday, July 3, and the mainboard IPO, a fresh issue of 2.91 crore shares, will close on Friday, July 5, 2024.
Bansal Wire Industries, along with its Subsidiary, Bansal Steel & Power Limited, offers over 3000 SKUs (stock-keeping units) in three broad segments: high-carbon steel wire, mild steel wire (low-carbon steel wire), and stainless steel wire.
The company has four manufacturing facilities in the National Capital Region (NCR), India- three in Ghaziabad (UP) and one in Bahadurgarh (Haryana). It has its dealer distribution network in 22 states and six union territories.
According to the company's RHP (red herring prospectus), from FY22 to FY24, its total income increased at a CAGR of 5.86 per cent from ₹2,205.07 crore to ₹2,470.89 crore. EBITDA increased at a CAGR of 14.87 per cent from ₹113.15 crore to ₹ 149.31 crore, and PAT (profit after tax) increased at a CAGR of 17.28 per cent from ₹57.29 crore to ₹78.80 crore.
The company raised over ₹223 crore in the anchor book round ahead of the opening of its IPO. According to the exchange filing, the company allocated 87,30,468 equity shares to anchor investors at a price of ₹256 per share.
The company intends to use the net proceeds from the issue to pay certain outstanding borrowings and fund its working capital requirements. Some part of the proceeds can also be used for general corporate purposes.
The issue witnessed healthy buying interest from retail as well as non-institutional buyers.
At the end of Day 1, Bansal Wire Industries IPO had seen an overall subscription of 1.76 times, with bids for 3,78,34,038 shares against 2,14,60,906 offered.
The retail segment was subscribed 2.47 times, receiving bids for 2,65,06,754 shares against 1,07,30,453 offered, and the NII segment saw a subscription of 2.44 times, receiving bids for 1,12,42,836 shares against 45,98,766 offered.
The segment reserved for qualified institutional buyers (QIBs) saw a subscription of 0.01 times, receiving bids for 84,448 shares against 61,31,687 offered.
According to investorgain.com, the Bansal Wire IPO's current GMP (grey market premium) is +60. This simply means the shares of Bansal Wire Industries traded at a premium of ₹60 in the grey market.
Bansal Wire Industries expected listing price was ₹316 per share, a premium of 23.44 per cent for the upper price band of the IPO at ₹256.
Bansal Wire Industries IPO is an entirely fresh issue of 2.91 crore shares, aimed at raising ₹745 crore. The price band of the issue has been fixed at ₹243 to ₹256 per share.
The minimum lot size for the issue is 58 shares, meaning the minimum investment required by retail investors is ₹14,848.
At least 35 per cent of the IPO is reserved for retail investors. The issue's 15 per cent shares have been allocated for non-institutional institutional investors (NII), and 50 per cent are reserved for qualified institutional buyers (QIB).
SBI Capital Markets Limited and Dam Capital Advisors Ltd are the book-running lead managers for Bansal Wire Industries IPO, while KFin Technologies Limited is the issue's registrar.
After the issue is subscribed, the share allotment is expected to be finalised on Monday, July 8, 2024. The company's shares may debut on the BSE and the NSE on Wednesday, July 10, 2024.
Parth Shah, a research analyst at StoxBox, believes the issue is fairly valued, and investors can subscribe to it for the medium to long term.
"On the financial front, the issue seems to be fairly valued. Hence, we advise the market participants to subscribe to the issue for a medium to long-term period," said Shah.
Shah pointed out that Bansal Wire Industries boasts strong customer diversification to de-risk impact on revenue and a diversified product portfolio serving different sectors with different needs effectively.
Shah believes the country's economic growth will benefit steel manufacturers, as the increase in steel consumption across the infrastructure, automobile, and housing sectors can be seen domestically.
Shah observed that to follow up with the growing trends, the company plans to set up a new manufacturing unit, the largest steel wire manufacturing plant in India. It also aims to expand its reach to other regions, i.e. south and east to garner additional market share.
Amit Goel, co-founder and chief global strategist at Pace 360, pointed out that the company is operating in a highly competitive and fragmented segment of metal wires.
"The issue appears reasonably priced, based on the FY24 annualized earnings. We expect a listing at around ₹320-330 per share, resulting in a listing gain of around 25 per cent," he said.
Master Capital Service also recommends subscribing to this IPO for listing gains.
"The company will become virtually debt free post this transaction, and they are currently operating at 80 per cent utilisation of most of its facilities, indicating they have some room to grow. The IPO is valued fairly as compared to its listed peers in India. We recommend subscribing to this IPO for listing gains," Master Capital said.
Brokerage firm Anand Rathi recommends subscribing to the issue for the long term.
Pointing out the company's valuation, Anand Rathi said that the company's P/E ratio is 50.8 times based on its FY24 earnings, with a market capitalisation of ₹40,078.3 million after the issuance of equity shares and a market cap to sales ratio of 1.62 times its FY24 earnings.
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