Plaza Wires, a leading manufacturer of wires and cables, debuted in the secondary market on Thursday, October 12. The stock was listed at Rs 84 per share, a premium of 55.5% over the IPO price of Rs 54 per share. Meanwhile, on NSE, the stock debuted at Rs 76, up 40.7%.

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The IPO received a healthy subscription and analysts believed that the stock would open at Rs 77 against the issue price of Rs 54 owing to the wire and cables manufacturer's strong track record of growth.

However, analysts' key concern is over the long-term trajectory of the business as it operates in an industry that is prone to high raw material volatility, which is in an uptrend over the years, along with being part of a highly competitive industry with multiple big players.

"While the P/E (price-earnings) of 22 times is based on FY23 earnings, which prices in most of the positives of the company, we advise the investors to book profits today and adopt a wait-and-watch approach to consider it for a long-term investment," said Prathamesh Masdekar, research analyst, Stoxbox.

According to dealers, shares of Plaza Wires were commanding a premium of Rs 23 to its issue price of Rs 54 in the grey market.

"Based on the latest grey market premium (GMP) of Rs 23, the expected listing price of Plaza Wires is around Rs 77 per share. This is a premium of 42.59% to the IPO price band of Rs. 51–54 per share," said Shivani Nyati, Head of Wealth at Swastika Investmart.

Further, Nyati said that 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, she expects to witness a good listing, with the stock likely to trade at a premium.

Subscription and other details

The IPO was subscribed 160.97 times, making it one of the most oversubscribed IPOs of the year.

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 net-worth individuals (HNIs) 388.09 times.

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

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

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

Company overview

Plaza Wires is involved in the business of manufacturing and selling wires along with selling and marketing LT aluminium 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.

Currently, 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% to Rs 7.5 crore, and revenue rose 3% to Rs 183 crore.

(Edited by : Amrita)

First Published:Oct 12, 2023 9:10 AM IST