Polycab has one of the most diversified product portfolios when compared to their peers and it is strongly placed in wires and cables space with healthy market share in the organised space.
Wires and cables manufacturer Polycab India will make a debut on bourses on April 16 after an overwhelming response to its public issue last week.
The final issue price is fixed at the higher end of the price band of Rs 533-538 per share.
The Rs 1,345-crore public issue saw a massive subscription of 51.96 times during April 5-9, 2019.
The reserved portion for qualified institutional buyers was oversubscribed 92 times and non-institutional investors 110 times while retail investors' category saw subscription of 4.65 times.
After a great response to IPO given strong fundamentals and prospects, analysts largely expect a bumper listing on Tuesday.
According to them, the listing price could be in the range of 10-38 percent over its final issue price.
"At upper price band of Rs 538, the IPO is priced at around 17x its FY19 annualized earnings, which is pretty reasonable compared to peers like Havells and KEI industries. The response to the IPO was largely on expected lines as there is some room for listing gains for the investors," Narendra Solanki, Research Head (Fundamental)- Investment Services at Anand Rathi told Moneycontrol.
He said, "If we do back of the envelope calculations then the listing gains could be anywhere around target multiple of 20x to 23x Polycab's FY19 annualized earnings i.e. around Rs 640 to Rs 740."
Polycab's revenue and PAT clocked 17 percent and 35 percent CAGR, respectively over FY15-18, while margin expanded to 10.7 percent in FY18 from 9.2 percent in FY15.
Arafat Saiyed, Reseach Analyst at Reliance Securities told Moneycontrol, "We expect listing premium to be at least 25 percent or price could be Rs 700 at open. If stock price falls below Rs 650, it would be a buy."
On FY21 earnings, their target price in medium-to-long term comes to Rs 830, he said.
As wires and cables industry is expected to see sustained demand driven by multiple favourable factors, and he expects growth momentum to sustain, going ahead as well.
Prashanth Tapse, AVP Research at Mehta Equities also said looking at its overwhelming response on the IPO offer and higher than anticipated oversubscription figure indicates higher demand and hence the stock could list at least by 15-20 percent higher to its offer price.
He believes Polycab has one of the most diversified product portfolios when compared to their peers and it is strongly placed in wires and cables space with healthy market share in the organised space.
He expects the company to deliver strong earnings growth in the coming years considering its wide PAN India distribution network helping to roll out new products more quickly and gives them a competitive advantage over their competitors.
Polycab is the largest manufacturer in the wires and cables industry in India, in terms of revenue from the wires and cables segment and provide one of the most extensive range of wires and cables in India.
Apart from wires and cables, PIL also manufactures and sells electric fans, LED Lighting and luminaires, switches and switchgears, solar products and conduits and accessories.
"We are expecting the listing premium to be anywhere in between 10-15 percent over IPO price," Astha Jain, Senior Research Analyst, Hem Securities said, adding company's prospects look strong along with healthy sectoral outlook.
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