Investor reaction to pen producer Flair Writing Industries Ltd.’s initial public offering (IPO), which was oversubscribed on the first day of bidding on Wednesday, has been positive. The 593-crore initial public offering (IPO) received 3.54 times the subscription up to 11:54 am on Thursday, the second day of bidding. Bids were received for 5,17,28,075 shares, compared to 1,44,13,188 shares on sale.
The subscription rate for the Retail Individual Investors (RIIs) portion was 4.62 times higher than the non-institutional investors’ quota, which was 5.25 times higher. 54% of subscriptions were made in the Qualified Institutional Buyers (QIBs) category.
The share listing may occur on December 5, although the IPO allotment will occur on November 30.
GMP for Flair Writing Industries’ IPO
Market watchers said that unlisted Flair Writing Industries shares were selling at a premium of Rs 74 on the grey market as compared to the company’s issue price. The grey market is anticipating a 24.34 percent listing gain from the public offering, as shown by the Rs 74 grey market premium, or GMP. The GMP is dynamic and dependent on market mood.
The willingness of investors to pay above the issue price is shown by the “grey market premium.”
Is It Worth It to Subscribe to Flair Writing Industries’ IPO?
Brokerage Anand Rathi said in a note that it rated the firm as “subscribe for long term” and said, “On the valuation front, we believe that the company is fairly priced.” Therefore, we advise the IPO to get a “Subscribe – Long Term” grade.
It said that Flair Writing, with its steady revenue growth, varied product line, and substantial global reach, has a prominent position as one of the top three companies in India’s writing instruments market.
“The Indian writing and creative industry is expected to grow at a CAGR of 7.7-8.4 per cent over FY2023-28, and the steel bottle industry is expected to grow at a 14-16 per cent growth rate over FY2023-28,” said Ventura Securities, another brokerage. These are going to be advantageous for Flair. Flair is valued at a PE of 27 times at the IPO price of Rs 304, as opposed to the industry average of 45 times.
It has also recommended that the IPO be subscribed to.
Flair Writing Industries: Cost, Size of Lot
In Flair Writing’s initial public offering (IPO), promoters and promoter group companies will sell up to Rs 301 crore in equity shares via an offer-for-sale (OFS) in addition to a new issuance of equity shares valued up to Rs 292 crore. Presently, 100% of the corporation is owned by promoters and organizations inside the promoter group.
For its IPO, Flair Writing Industries Ltd. has set a price range of Rs. 288–304 per share. An application must have a minimum lot size of 49 shares. Retail investors are needed to invest a minimum of Rs 14,896. For NII, the minimum lot size investment is 68 lots (3,332 shares), worth Rs 1,012,928; for NII, it is 14 lots (686 shares), worth Rs 208,544.
Flair Writing Industries Ltd raised Rs 178 crore from anchor investors before to its first public offering. At the top of the pricing range, Rs 304 a share, the business has allotted 58.52 lakh equity shares to 23 funds.
SBI Mutual Fund (MF), Aditya Birla Sun Life MF, Tata MF, ICICI Prudential Life Insurance Company, SBI Life Insurance Company, Troo Capital, and Winro Commercial (India) Ltd. are among the participants in the anchor book.
The money raised from the new issuance will be used to finance the company’s capital expenditures as well as the subsidiary Flair Writing Equipments Pvt Ltd (FWEPL) and the establishment of a writing instrument manufacturing plant in Gujarat’s Valsad region.
Additionally, the money raised will be used to meet the working capital needs of the business, as well as its subsidiaries Flair Cyrosil Industries and FWEPL. The funds will also be used for regular business needs and debt repayment. With a market share of around 9% as of March 2023, the company—which owns the almost 45-year-old main brand “Flair”—is among the top three competitors in the writing instruments sector overall.
In addition to producing and selling writing equipment including pens, calculators, and stationery, it has expanded into the production of steel bottles and housewares. The principal book-running managers for the IPO are Axis Capital Ltd. and Nuvama Wealth Management Ltd., previously known as Edelweiss Securities Ltd.