Company and IPO Overview:
Plaza Wires Limited is involved in the manufacturing and selling of wires, along with the selling and marketing of Fast Moving Electrical Goods (FMEG) and LT aluminium cables under their flagship brand ‘Plaza Cables’ and home brands ‘Action Wires’ and ‘PCG’. The company’s product mix includes a variety of wires and cables in addition to FMEG, including electric fans, water heaters, switches, switchgear, PVC insulated electrical tape, and PVC conduit pipe and accessories.
Their product portfolio includes house wires, single and multicore round flexible industrial cables, and industrial cables designed for submersible pumps and motors up to 1.1kv grade. Additionally, the company offers a diverse range of wires and cable products, including LT power control cables, TV dish antenna co-axial cables, telephone and switchboard industrial cables, computer and LAN networking cables, closed-circuit television cables, solar cables, etc.
The company sells their products through various distribution channels depending on geography, industry norms, and trends. They have dealer and distribution networks to sell and promote the products. The dealers and distribution partners are chosen based on their market reputation, sales reach, and financial stability. They actively participate in government tenders for project supply and also sign direct deals with infrastructure projects.
Plaza Wires IPO is also a main board IPO which is ready to go public, the company is about to raise around ₹ 71.28 crores via IPO comprising Fresh Issue only. The price band of the issue is ₹ 51 to ₹ 54 with a minimum market lot of 277 shares. Plaza Wires IPO subscription quota for retail is 10.00%, NII is 15.00% and QIB is 75.00%.
Financials (rounded off):
Date | Total Revenue (₹ in cr) | PAT (₹ in cr) |
31/03/2021 | 146 | 4.2 |
31/03/2022 | 177 | 5.95 |
31/03/2023 | 183 | 7.5 |
Objectives of the Issue:
1. To fund the capital expenditure to set up the new manufacturing unit for cables, house and fire-resistant wires, aluminium and solar cables.
2. To fund the working capital requirement of the company.
IPO Details:
IPO Date | 29/09/2023-04/10/2023 |
Face Value | ₹10 per share |
IPO Price Band | ₹51-₹54 per share |
IPO Lot Size | 277 Shares |
Listing at | NSE, BSE |
Basis of Allotment | 09/10/2023 |
Credit of Shares in Demat | 11/10/2023 |
Listing Date | 12/10/2023 |
Pre-Issue Shareholding | 100% |
Post-Issue Shareholding | 69.83% |
Retail Minimum Lot Size | 277 shares (₹14,958) |
Valuations & Margins:
Indicators | FY 21 | FY 22 | FY 23 |
EPS | 1.39 | 1.95 | 2.46 |
P/E | - | - | 21.95 |
EBITDA (%) | 7.47 | 7.46 | 8.6 |
ROCE (%) | 12 | 14 | 16 |
Important things to note about the Company:
Top reasons to consider the IPO:
1. The wire company boasts a wide distribution network across India, with over 1249 authorized dealers and distributors, and 3 branch offices in Rajasthan, Uttarakhand and Uttar Pradesh. This network is strengthened by repeat relationships with key distributors and dealers.
2. Plaza Wires offers a diverse mix of products, including wires and cables, FMEG products such as electric fans, water heaters, switches and switchgears, PVC insulated tape, and PVC conduit pipe & accessories. This variety caters to a wide range of customer needs.
3. Plaza Wires excels in strategic marketing and brand building, investing in campaigns to enhance brand visibility and awareness. It engages key stakeholders through Electrician Meets, distributor & dealer meets, and customer-centric advertising, promoting brand loyalty and product quality.
4. Plaza Wires plays a pivotal role in the communication, automotive, power, infrastructure, and household sectors. With India being the fastest-growing telecom market globally and the government’s ambitious housing initiatives, the demand for the company’s cable products is expected to remain strong.
Risk Factors to watch out in the IPO:
1. The inability to construct the proposed manufacturing unit and expand the product portfolio within the estimated time-frame could hinder business expansion, cost reduction, competitive positioning, and profitability. Delays could lead to time and cost overruns, negatively impacting the business.
2. The production quantity and costs are heavily reliant on sourcing raw materials and packaging materials at acceptable prices. Price volatility and supply interruptions could adversely affect the business.
3. Plaza wires generate a significant portion of its sales from operations in Delhi, UP, Haryana, Kerala, and Uttarakhand, accounting for 75% of the revenue. Any demographic or economic changes in these regions could impact business operations.
4. The financial health of Plaza wires is predominantly dependent on the sale of its Wires and Cables products. Failure to anticipate customer preferences, ensure product quality, or adapt to reduced demand for these products could adversely affect the business.
Crisp Insights:
Plaza Wires IPO GMP Today: The Company is commanding a GMP of Rs.10.
Plaza Wires GMP is good and hence, listing gains are possible.
Plaza Wires IPO Review: Cables are essential in building things like houses and infrastructure. The demand for house wires is persistent. India's wires and cables industry is to expand at a CAGR of 14.50% by FY 2026. Plaza Wires plans to expand its manufacturing capabilities, increase the capacity to manufacture new products, and continue to broaden its brand in the wires and cables business as well as the FMEG business. The bet could be high risky high rewarding, well-informed investors with a decent knowledge in the sector may park their funds.
Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.
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