Bansal Wire IPO: Key Details for Competitive Exam Preparation

Historical Context: The concept of Initial Public Offerings (IPOs) dates back to the early 17th century when the Dutch East India Company became the first company to offer shares to the public. In India, the IPO market has evolved significantly since the liberalization of the economy in 1991, which led to a surge in public offerings and increased participation from retail investors. The Securities and Exchange Board of India (SEBI) regulates the IPO process to ensure transparency and protect investor interests.

Bansal Wire IPO Overview: The Initial Public Offering (IPO) of Bansal Wire Industries Limited, a prominent player in the steel wire industry, opened for bidding on July 3, 2024, and will close on July 5, 2024. Investors in the Indian primary market have one day left to apply for the IPO. The public issue has garnered a strong response, with the grey market showing bullish trends. As of today, shares of Bansal Wire Limited are trading at a premium of ₹65 in the grey market.

Grey Market Premium (GMP): The grey market premium (GMP) for Bansal Wire IPO today stands at ₹65, an increase from ₹59 the previous day. This rise is attributed to strong subscription status and positive market sentiments. Analysts expect the Indian stock market to maintain its upward trend, potentially leading to further increases in the GMP.

Subscription Status: As of 3:12 PM on the third day of bidding, the book build issue was subscribed 41.68 times. The retail portion was filled 12.38 times, the Non-Institutional Investors (NII) segment was subscribed 48.16 times, and the Qualified Institutional Buyers (QIB) portion was booked 88.09 times.

Analyst Review: Rajan Shinde, a Research Analyst at Mehta Equities, has given a ‘subscribe’ recommendation for the Bansal Wire IPO. He notes that at the upper price band of ₹256, the issue seeks a market cap of ₹4008 crore. The company is asking for a Price-to-Earnings (PE) ratio of 50.86x based on FY 2024 earnings, which is comparable to its industry peers. Shinde anticipates healthy top-line growth in FY 2025 and a significant increase in the bottom line due to the repayment of outstanding borrowings from the IPO proceeds. He recommends subscribing to the IPO for long-term gains, expecting a 25% increase over the issue price.

Investment Strategy: Arun Kejriwal, Founder of Kejriwal Research and Investment Services, suggests that while the IPO is offered at slightly higher valuations, it is expected to yield decent listing gains. However, he advises booking profits post-listing due to potential corrections in the secondary market. Kejriwal also mentions that the company’s capacity is expected to double next year, but this will reflect in the balance sheet over the next two to three years. He recommends considering the stock for long-term investment at discounted levels after initial profit booking.

Key Dates:

• Tentative Allotment Date: July 6, 2024
• Final Allotment Date (if announced on Saturday): July 8, 2024
• Listing Date: July 10, 2024

Summary:

• IPO Open Date: July 3, 2024
• IPO Close Date: July 5, 2024
• Grey Market Premium (GMP): ₹65
• Subscription Status:
  • Book Build Issue: 41.68 times
  • Retail Portion: 12.38 times
  • NII Segment: 48.16 times
  • QIB Portion: 88.09 times
• Analyst Recommendation: ‘Subscribe’ for long-term gains
• Investment Strategy: Book profits post-listing; consider long-term investment at discounted levels
• Tentative Allotment Date: July 6, 2024
• Listing Date: July 10, 2024