The initial public offering (IPO) of Plaza Wires opened for subscription on Friday, September 29, and the issue will close on Wednesday. In the unlisted market, the company's shares are commanding a premium of Rs 12.

Share Market Live

NSE

Analysts are divided on the Plaza Wires IPO. Some say the wires and cable maker's business operates in a highly competitive industry with multiple big players which can challenge the pricing power of the company, others have highlighted the company's competitive strengths, which include product portfolio, experienced management, dedicated employee base, among others.

"An the upper price band, the issue is valued at a P/E (price-earning) of 22 times based on FY2023 earnings, which prices in most of the positives of the company. Moreover, it is important to note that Plaza Wires operates in an industry which has high raw material volatility (which is in an uptrend over the years)," said brokerage BP Wealth.

Additionally, the brokerage said that the company's business operates in a highly competitive industry with multiple big players which can challenge the pricing power of the company. Thus, considering the above factors, it recommended investors to 'Avoid' the issue.

Investmentz, meanwhile, has assigned a 'Subscribe' rating to the issue, saying the company has built relationships with dealers and distributors across the segments by offering products matching their requirements and specifications.

The Delhi-based wires manufacturing company is selling its shares between Rs 51-54 apiece. Investors can bid for a minimum of 277 shares in one lot and in multiples thereafter.

The Rs 71.28-crore offer comprises only a fresh equity issue of 1.32 crore by the company and there is no offer-for-sale component. Hence, the entire issue proceeds, excluding IPO expenses, will go to the company.

About 75 percent of the offer has been reserved for qualified institutional buyers, 15 percent for non-institutional investors and the rest 10 percent for retail investors.

The net IPO proceeds are proposed to be utilised towards funding the capex for setting up a new manufacturing unit for house wires, fire-resistant wires and aluminum cables to expand its product portfolio. Further, the proceeds will also be utilised for funding working capital requirements and other general corporate purposes.

Ahead of the issue opening, the company raised Rs 20 crore from two anchor investors on September 27.

Chanakya Opportunities Fund I and Astrone Capital UCC-Arven bought 18.52 lakh equity shares each in the company at Rs 54 per share.

".....has finalised allocation of 37,04,044 equity shares to anchor investors at Rs 54 per share," the company said in its filing to exchanges.

Pantomath Capital Advisors is the sole book-running lead manager to the issue, while KFin Tech is the registrar.

The company will finalise the basis of allotment of IPO shares by October 9 and the equity shares will be credited to the demat accounts of eligible investors by October 11.

Shares of Plaza Wires are expected to get listed on both exchanges on October 12.

Company overview

Plaza Wires is involved in the business of manufacturing and selling wires along with selling and marketing of LT aluminum cables and fast moving electrical goods (FMEG). The company’s product mix includes products of different types of wires and cables, and FMEG such as electric fans, water heaters, switches, and switch gears, PVC insulated electrical tape, and PVC conduit pipe and accessories.

Presently, the company enjoys a network of 1,249 authorised dealers and distributors spread across pan India and C&F agents in Punjab. The company supplies its products, mainly in the states of Delhi, Uttar Pradesh, Haryana, Kerala, and Rajasthan

For the financial year ended March 31, 2023, the company's net profit climbed 27 percent to Rs 7.5 crore, and revenue rose 3 percent to Rs 183 crore.