Fiona Nanna, ForeMedia News

6 minutes read. Updated 9:00AM GMT Wed, July 3, 2024

The highly anticipated ₹745 crore initial public offering (IPO) of Bansal Wire Industries is now open for subscription, starting Wednesday, July 3. This IPO represents a fresh issue of 2.91 crore shares and will remain open until Friday, July 5, 2024.

Bansal Wire Industries, along with its subsidiary Bansal Steel & Power Limited, offers a diverse range of over 3000 stock-keeping units (SKUs). These products fall into three main categories: high-carbon steel wire, mild steel wire (low-carbon steel wire), and stainless steel wire. The company operates four manufacturing facilities in India’s National Capital Region (NCR) – three in Ghaziabad, Uttar Pradesh, and one in Bahadurgarh, Haryana. It has an extensive dealer distribution network across 22 states and six union territories.

Financial Performance

According to the company’s Red Herring Prospectus (RHP), Bansal Wire Industries has demonstrated consistent financial growth. From FY22 to FY24, the company’s total income grew at a compound annual growth rate (CAGR) of 5.86%, from ₹2,205.07 crore to ₹2,470.89 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased at a CAGR of 14.87%, from ₹113.15 crore to ₹149.31 crore, while profit after tax (PAT) rose at a CAGR of 17.28%, from ₹57.29 crore to ₹78.80 crore.

IPO Details

The IPO aims to raise ₹745 crore through a fresh issue of 2.91 crore shares, with a price band set at ₹243 to ₹256 per share. The minimum investment required by retail investors is ₹14,848 for a lot size of 58 shares. The IPO has allocated 35% of shares for retail investors, 15% for non-institutional investors (NII), and 50% for qualified institutional buyers (QIB).

Leading the IPO are SBI Capital Markets Limited and Dam Capital Advisors Ltd as the book-running lead managers, with KFin Technologies Limited serving as the registrar. Following the subscription period, share allotment is expected to be finalized on Monday, July 8, 2024. Bansal Wire Industries’ shares are anticipated to debut on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Wednesday, July 10, 2024.

Subscription Status

The IPO has garnered significant interest from both retail and non-institutional investors. As of 11:15 AM on the first day, the IPO had an overall subscription of 0.49 times, with bids for 1,05,81,056 shares against 2,14,60,906 offered. The retail segment saw a subscription of 0.81 times, while the NII segment recorded a subscription of 0.40 times.

Grey Market Premium (GMP)

As reported by investorgain.com, the grey market premium (GMP) for Bansal Wire Industries IPO stood at +66 at 11:15 AM on Wednesday. This indicates that shares of Bansal Wire Industries were trading at a ₹66 premium in the grey market, projecting an expected listing price of ₹322 per share, a 25.78% premium over the upper IPO price band of ₹256.

Expert Opinions: Should You Apply?

Parth Shah, a research analyst at StoxBox, suggests that the IPO is fairly valued and recommends subscribing for medium to long-term gains. Shah highlights the company’s strong customer diversification and a wide product portfolio that caters to various sectors, benefiting from the country’s economic growth and increasing steel consumption.

Amit Goel, co-founder and chief global strategist at Pace 360, notes that the company operates in a competitive and fragmented market. He anticipates a listing price between ₹320-330 per share, offering an approximate 25% listing gain.

Master Capital Service also recommends subscribing to the IPO for listing gains, emphasizing the company’s strong financial position and utilization capacity. They point out that the company will become virtually debt-free post-IPO.

Anand Rathi, a brokerage firm, advocates for a long-term investment in the IPO, citing the company’s valuation metrics. They report that the company’s price-to-earnings (P/E) ratio is 50.8 times based on FY24 earnings, with a projected market capitalization of ₹40,078.3 million post-issuance.

Bansal Wire Industries’ IPO presents a promising opportunity for investors, backed by robust financial growth and strategic expansion plans. With substantial interest from retail and institutional investors, the IPO is set to make a significant impact in the market. Investors are advised to consider expert opinions and market conditions before making their investment decisions.

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