Stationary products manufacturer Flair Writing Industries turned out to be the fourth company recording better-than-expected listing gains in the current week. All the credit is for the strong market mood at Dalal Street and reasonable valuations along with robust IPO subscription numbers.
Flair shares opened with 64.8 percent gains at Rs 501 on the National Stock Exchange, which was double the analysts’ expectations as well as grey market premium.
The stock immediately saw some 50 rupees correction and was stuck at Rs 450.90 for rest of the trading session, i.e. 10 percent down from the opening price.
The exchanges fixed the 10 percent upper and lower circuit for the stock compared to the price decided in the pre-opening session, i.e. opening price.
Compared to the issue price, the stock rallied 48.32 percent at close on the NSE, with volume of 1.27 crore equity shares, while on the BSE, it gained 48.91 percent with volume of 6.97 lakh shares.
The Mumbai-based writing instruments manufacturing company closed its public issue last week after a 46.68 times subscription during November 22-24.
Also read: Flair Writing lists at 66% premium: Should you buy, hold, or book profit?
It raised Rs 593 crore via public issue comprising a fresh issuance of shares worth Rs 292 crore and an offer-for-sale of Rs 301 crore by the Rathod family. The price band for the offer was Rs 288-304 per share.
Most investors advised holding the stock for the medium-to-long term given the strong fundamentals and market share in the writing instruments industry.
"We remain constructive on the company and recommend investors who have received allotment to hold the stock from a medium to long term perspective," Parth Shah, research analyst at StoxBox said.
He feels Flair leverages its deep insights into the writing products business, coupled with a diversified product range in a segment characterized by perennial demand. The scale advantage allows the company to maintain cost competitiveness, further solidifying its market position, he said.
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Being among the top three players in the overall writing instruments industry, Flair reported a 9.9 times CAGR growth in net profit during FY21-FY23, with the EBITDA margin rising sharply from 7.7 percent in FY21 to 21.2 percent in FY23. Revenue increased at a CAGR of 78 percent during the same period.
"The rapid revenue growth along with the geometric expansion in demand is a testament to its successful market penetration and responsiveness to increased demand, particularly in the school sector," Parth said, adding as a stationery entity, the net profit margin exceeding 10 percent underscores the company's sound financial health.
Rajan Shinde, research analyst at Mehta Equities also advised long-term investors to hold the stock considering healthy growth in the writing and creative instruments industry in India and strategic partnership with global brands.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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