Unlisted shares of Bansal Wire Industries Ltd are trading Rs 60 higher in the grey market, expecting a 23.44 per cent listing gain from the public issue
Bansal Wire Industries IPO: The initial public offering of steel wire maker Bansal Wire Industries Limited, which was opened for public subscription on July 3, received 1.86 times subscription on the first day of bidding. The Rs 745-crore IPO, which will conclude on July 5, is today witnessing second day of bidding. Till 10:43 am on Thursday, the IPO received a 2.67 times subscription garnering bids for 5,42,99,774 shares as against 2,03,71,094 shares on offer.
The price band of the IPO has been fixed at Rs 243-Rs 256 per share.
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The quota for non-institutional investors received 4.04 times subscription, while retail individual investors (RIIs) portion got subscribed 3.59 times. The qualified institutional buyers (QIB) category received 2 per cent subscription so far.
A day before its IPO, Bansal Wire Industries on Tuesday garnered Rs 223 crore from anchor investors.
The IPO allotment will take place on July 8, while its shares will likely be listed on BSE and NSE on July 10.
Investors need to apply for a minimum of 58 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,848 [58 (lot size) x Rs 256 (upper price band)].
Bansal Wire Industries IPO GMP Today
According to market observers, unlisted shares of Bansal Wire Industries Ltd are trading Rs 60 higher in the grey market as compared with its issue price. The Rs 60 grey market premium or GMP means the grey market is expecting a 23.44 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
The GMP now is lower than that in the morning, when it stood at Rs 66.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
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Bansal Wire Industries IPO: Analysts’ Recommendations
Analysts have given ‘subscribe’ recommendations to the IPO, especially for long term. However, they also flag some risks.
In its IPO note, brokerage firm Master Capital Service Ltd said, “Bansal Wire Industries 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.”
Bansal Wire Industries will become virtually debt free post this transaction and they are currently operating at 80 per cent utilisation on most of its facilities, indicating they have some room to grow, it added.
“The IPO is valued fairly as compared to its listed peers in India. We recommend to Subscribe to this IPO for listing gains,” Master Capital stated.
Another brokerage Anand Rathi in its note on the Bansal Wire IPO said, “Bansal Wire Industries Limited Steel wire manufacturers generating a revenue of Rs 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’s P/E ratio is 50.8 times based on its FY24 earnings, with a market capitalization 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, it added. The company offers around 2,000 SKUs, while the subsidiary provides about 1,500 SKUs.
“Looking at these factors we recommend ‘Subscribe – Long Term’ rating to the IPO,” Anand Rathi stated.
Brokerage Swastika remains cautious on the Bansal Wire Industries IPO while granting a ‘Subscribe’ recommendation.
“Bansal Wire’s financial performance has been positive, demonstrating consistent growth in both revenue and profitability. However, some key risks require careful consideration. 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 fragmanted, presenting challenges for market share expansion,” Swastika said in its IPO note.
The IPO is priced at a P/E ratio of 41.41x, which appears on the higher end.
“Considering both the company’s strengths and potential risks, we recommend this IPO only for investors with a high-risk tolerance,” Swastika stated.
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Bansal Wire Industries IPO: More Details
The Bansal Wire Industries IPO is an entirely fresh issue of equity shares worth Rs 745 crore, with no offer-for-sale (OFS) component.
The funds will be used for the payment of debt, to support the working capital requirements of the company, and for general corporate purposes.
Bansal Wire Industries is engaged in the business of manufacturing and exporting steel wires. It operates in three broad segments’ high carbon steel wire, mild steel wire (low carbon steel wire) and stainless steel wire.
Also, 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 fiscal.
The company’s total income increased at a CAGR of 28 per cent to Rs 2,422.56 crore in FY23 from Rs 1,480.41 crore in fiscal 2021, and profit after tax (PAT) increased at a compound annual growth rate (CAGR) of 21.7 per cent to Rs 59.93 crore in FY23 from Rs 40.46 crore in FY21.
Half of the issue size has been reserved for qualified institutional investors (QIBs), 35 per cent for retail investors, and the remaining 15 per cent for non-institutional investors.
SBI Capital Markets and DAM Capital Advisors are the book running lead managers to the issue.
