Bansal Wire IPO Second Day of Bidding: Should You Invest? Key Details and Historical Context

Historical Context: Initial Public Offerings (IPOs) have long been a significant event in the financial markets, providing companies with an opportunity to raise capital from public investors. The concept of IPOs dates back to the early 17th century when the Dutch East India Company issued shares to the public. In India, the IPO market has evolved significantly since the liberalization of the economy in the 1990s, becoming a crucial avenue for companies to access public funds and for investors to participate in the growth of these companies.

Bansal Wire IPO Subscription Status: The IPO of Bansal Wire Industries Ltd has seen substantial interest, particularly from non-institutional investors, leading to an oversubscription on the second day of bidding. According to BSE data, the subscription status stands at 5.73 times the offered shares.

• Retail Investors: The retail investor quota has been subscribed 6.19 times.
• Non-Institutional Investors (NII): This segment has seen a subscription of 12.16 times.
• Qualified Institutional Buyers (QIBs): The QIB portion has received 9% subscription.

On the first day of bidding, the IPO had already garnered significant attention, with a subscription status of 1.76 times. The breakdown was as follows:

• Retail Investors: 2.47 times subscription.
• Non-Institutional Investors: 2.44 times subscription.
• QIBs: 1% reserved.

IPO Allocation:

• NII: 15% of shares.
• QIB: 50% of shares.
• Retail Investors: 35% of shares.

Company Overview: Bansal Wire Industries Ltd is engaged in the manufacture and export of various types of steel wires, including high carbon steel wire, mild steel wire (low carbon steel wire), and stainless steel wire. The company plans to expand its market position by introducing a new sector of specialty wires through its upcoming Dadri factory.

Financial Metrics and Valuation:

• Market Capitalization: ₹40,078.3 million post-IPO.
• P/E Ratio: 50.8 times based on FY24 earnings.
• Revenue CAGR (FY22–24): 5.9%.
• EBITDA Margin (FY24): 6.04%.
• PAT Margin (FY24): 3.19%.
• Return on Equity (FY24): 21.19%.
• Diluted EPS (FY24): ₹6.18.
• PE Multiple: 41.4x at the higher end of the pricing band.
• Industry Average PE Multiple: 32.72x.
• P/BV (FY24): 7.72x.

IPO Details:

• Total Value: ₹745 crore.
• Fresh Issue: 29,101,562 equity shares.
• No Offer-for-Sale (OFS) Component.

Lead Managers and Registrar:

• Lead Managers: SBI Capital Markets Limited and Dam Capital Advisors Ltd.
• Registrar: Kfin Technologies Limited.

Grey Market Premium (GMP):

• Current GMP: +₹60.
• Expected Listing Price: ₹316 per share, which is 23.44% higher than the IPO price of ₹256.

Summary:

• Oversubscription: 5.73 times overall, with high interest from non-institutional investors.
• Retail Quota: Subscribed 6.19 times.
• NII Quota: Subscribed 12.16 times.
• QIB Quota: 9% subscription.
• Financial Health: Steady revenue growth, moderate EBITDA and PAT margins, and strong return on equity.
• Valuation: Higher than industry average, but justified by growth prospects.
• GMP: Indicates a positive market sentiment with a premium of ₹60.

Investment Recommendation: Given the company’s strong market position, diverse product portfolio, and growth prospects, the IPO is recommended for subscription with a medium- to long-term investment horizon.