Flair Writing Industries IPO shares trading premium in the grey market has been increased further on November 30, a day before making the grand debut on the bourses. The optimism in the equity markets, healthy growth in the writing instruments and stationery segment reported by the company and expected growth potential in the segment going ahead, reasonable valuations, and strong IPO subscription numbers seem to be boosting the premium.
The Mumbai-based writing instruments company will get listed on the BSE and NSE on December 1. This would be the fifth listing among mainboard IPOs launched last week. Tata Technologies, Gandhar Oil Refinery and IREDA had a superb debut, but the Fedbank Financial Services listing was muted.
According to the market observers, Flair shares were available at nearly a 30 percent premium in the grey market, up from around the 27 percent premium it traded a couple of days back. This means the trading price in the grey market was Rs 394 now against Rs 386-387 per share a couple of days back.
The grey market is an unofficial market wherein the IPO shares can be bought and sold till the listing. Generally, the participants in the IPO look at the grey market to get some hints about the possible listing price.
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Citing the grey market price and the above reasons, Rajan Shinde, research analyst at Mehta Equities believes the healthy listing is justified.
"High growth expected in the writing instruments and stationery segment, diversification into housewares, steel bottles and appliances and ongoing expansion plans to tap the future growth," are key reasons behind the listing price said Rajan.
Being a leading player in the writing instruments and stationery segment, Flair Writing received higher-than-expected subscription demand, especially from QIB investors, who were more aggressive in bidding by 115.6 times.
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Overall, the Rs 593-crore public issue was subscribed 46.68 times during November 22-24. High networth individuals bought 33.37 times the allotted quota and the portion set aside for retail investors was booked 13.01 times.
Parth Shah, research analyst, StoxBox also sees a positive listing for the issue. "The company's rapid revenue growth, aligned with the geometric expansion in demand, is a testament to its successful market penetration and responsiveness to increased demand, particularly in the school sector," he said.
He believes the company is an attractive proposition considering its reasonable valuation.
The initial public offering was a mix of fresh issue amounting to Rs 292 crore and an offer-for-sale (OFS) of Rs 301 crore by the Rathod family.
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Flair, ranked among the top three players in the overall writing instruments industry exhibited a commendable track record of robust and consistent financial performance, will be utilising net fresh proceeds for setting up a new manufacturing facility for writing instruments in Valsad, capital expenditure and working capital requirements, repaying debts and remainder for general corporate purposes.
With a well-diversified product portfolio comprising over 699 different items, and a robust distribution network ensuring its products' accessibility to consumers nationwide, Flair recorded profit growth at a CAGR of 993 percent and revenue grew at a CAGR of 78 percent during FY21-FY23, while EBITDA (earnings before interest, tax, depreciation and amortisation) increased at a CAGR of over 180 percent.
Even the EBITDA margin expanded sharply from 7.7 percent in FY21 to 21.2 percent in the quarter ended June FY24, while return on equity rose to 31.4 percent from 0.4 percent during the same period.
Investors who participated in the offer can check their share allotment status either on the BSE website or the portal of the IPO registrar (Link Intime India) by following three easy steps.
On the IPO registrar's portal a) One can select 'Flair Writing Industries Limited - IPO' in the dropdown b) Select and accordingly enter either 'PAN number', or 'Application number', or 'DP Client ID' c) Finally click on 'search' button
On the BSE website a) One must select issue type 'equity' and issue name 'Flair Writing Industries Limited' b) Enter either 'application number' or 'PAN number' c) Check box (I am not a robot) and click on 'search' button
The company will complete the transfer of credit shares to the demat accounts of eligible investors by November 30.
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