Delhi-based wires manufacturer Plaza Wires is likely to debut with a strong premium of more than 40 percent over the issue price of Rs 54 per share, on October 12, given the healthy IPO subscription numbers and positive market conditions, experts said.
The initial public offering (IPO) has attracted a lot of interest from investors, subscribing 161 times from September 29 to October 5. All investors were aggressive in terms of bidding, with retail investors buying 374.81 times the allotted quota, qualified institutional investors (QIIs) 42.84 times and high networth individuals (HNIs) 388.09 times.
The benchmark indices have also seen a smart recovery in recent days, with the Nifty50 reporting around 500 points rally from August lows after easing geopolitical tensions, and cooling down oil prices.
"Considering the strong subscription of Plaza Wires of around 161x, we expect the company to open at a handsome premium of about 41 percent over its listing price," Anushi Vakharia, research analyst at StoxBox said. However, the P/E of 22x based on FY23 earnings priced in most of the positives of the company, she feels.
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The demand for its equity shares also remained strong in the grey market, trading with a 42 percent premium over the issue price, analysts said. The grey market is an unofficial platform wherein the IPO shares can be bought and sold till the listing.
"Based on the latest grey market premium, the expected listing price of Plaza Wires is around Rs 77 per share," Shivani Nyati, head of wealth at Swastika Investmart said.
Plaza Wires is a well-managed company with a strong track record of growth and the IPO was also well received by the investors. Thus it is expected to witness a good listing, with the stock likely to trade at a premium, Shivani said.
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The company has successfully raised Rs 71.28 crore via public issue of 1.32 crore equity shares, at the upper end of the price band of Rs 51-54 per share. It was entirely a fresh issue by the company.
The issue proceeds will be used mainly for setting up a new unit for house wires, fire-resistant wires & cables, aluminium cables and solar cables to expand the product portfolio at a cost of Rs 24.41 crore. Further, the working capital requirements of Rs 22 crore will be funded via fresh issue money, and the remaining will be used for general corporate purposes.
The company, which also sells LT aluminium cables and fastmoving electrical goods (FMEG) under its flagship brand Plaza Cables and home brands such as Action Wires and PCG, has reported a 26 percent on-year growth in profit at Rs 7.51 crore for the year ended March 2023. Net revenue from operations grew 3.2 percent to Rs 182.4 crore from 176.7 crore in this period.
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The comparable peers in the listed space for Plaza Wires are Cords Cable Industries, V-Marc India, Dynamic Cables and Paramount Communications.
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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