The initial public offering (IPO) of Bansal Wire Industries saw a decent response from the investors during the second day of the bidding process. After being fully subscribed on the first day of the bidding, the issue managed to draw further interest from HNI and retail investors, while QIBs waited for the last day.
The New Delhi-based Bansal Wire Industries is selling its shares in the price band of Rs 243-256 apiece. Investors can apply for a minimum of 58 shares and its multiples thereafter. It is looking to raise Rs 745 crore via IPO, which is entirely a fresh share sale of 2,91,091 562 equity shares.
According to the data, the investors made bids for 9,15,30,380 equity shares, or 4.27 times, compared to the 2,14,60,906 equity shares offered for the subscription by 2.45 pm on Thursday, July 04. The three-day bidding for the issue will conclude on Friday, July 05.
The allocation for retail investors was subscribed 5.16 times, while the portion reserved for non-institutional investors saw a subscription of 7.81 times. However, the quota set aside for qualified institutional bidders (QIBs) was booked only four per cent of the time.
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 grey market premium of Bansal Wire Industries has taken a hit after the first day of the bidding. Last heard, the company was commanding a premium of Rs 55-60 in the unofficial market, suggesting a listing pop of about 21-23 per cent for the investors. However, the premium in the grey market stood around Rs 66-70 levels, a day ago.
Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it on the back of robust business model, strong growth prospects, rising demand of products and long term experience of the management. However, limited reach in the southern Indian and raw material price fluctuations are the key risks for the company.
The company is looking to raise funds to pay off its debt in its own company as well as infuse funds into its subsidiary for the same purpose, and the balance funds will be used to fund the working capital for growth, said Master Capital Services in its IPO note.
"The company will become virtually debt free post this transaction and they are currently operating at 80% utilization on 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 to Subscribe to this IPO for listing gains," it said.
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. 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.
Considering the FY24 EPS of Rs 5.03 on a post-issue basis, Bansal Wire Industries is going to list at a P/E of 50.86 times with a market cap of Rs 4,007.8 crore, whereas its peers namely DP Wires, Bedmutha Industries and Rajratan Global Wire are trading at a P/E of 19.0 times, 35.8 times and 41.7 times, respectively, said Marwadi Financial Services.
"We assign a 'subscribe' rating to this IPO as the company is a steel wire manufacturer with established market position and strong brand equity. Also, it is available at reasonable valuations considering the future growth potential of the company," it added.
DAM Capital Advisors (Formerly IDFC Securities) and SBI Capital Markets 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.