IPO listed on 10 Jul'24
Bansal Wire Industries Ltd
Minimum Investment
₹ 14,848 / 58 shares
Grey market premium
₹ 60 (23% premium)
Issue price
₹ 256
Listing price
₹ 356
Listing day %
37%
Listing on
Jul 10, 2024
Our Verdict:
Neutral
- Bansal Wire Industries has shown consistent growth in its revenue and profits over the past three years. The Return on Capital Employed has maintained a stable rate of ~18%. However, the debt-to-equity ratio of 1.6x is somewhat high. Nevertheless, with most capital expenditures for the Dadri facility now complete and anticipated debt reduction from IPO proceeds, the firm’s financial health is expected to improve.
- In terms of valuation, the IPO pricing appears high at a P/E ratio of 41x trailing earnings, discounting the near-term positives and offering limited potential for short-term growth. Additionally, the existing challenges in the steel industry, compounded by decreasing steel spreads, heighten these valuation concerns.
- Nonetheless, the sustained focus on infrastructure development by the government ensures a robust demand for steel in India. Therefore, long-term investors should keep this stock on their radar for a more favourable entry point. Meanwhile, those with a higher risk appetite might consider investing for possible listing gains, as indicated by the grey market premium (GMP).
About the company
Founded in
11 Dec'85
Managing director
Pranav Bansal
- Bansal Wire specializes in producing steel wires and markets its products under the brand 'Bansal'. It operates five manufacturing plants located in the National Capital Region (NCR), boasting a combined installed capacity of 262,000 MTPA for steel wire production.
- Bansal Wire’s product range includes high-carbon steel wires, low-carbon steel wires, and stainless steel wires. These products find extensive use across various industries such as power and cable, automotive, infrastructure, and consumer durables.
STRENGTHS
- Extensive Market Reach: Bansal Wire is the largest manufacturer of stainless-steel wire and ranks second in overall steel wire production by volume in India. It has established a comprehensive network that ensures a nationwide presence, serving over 5,000 customers across various sectors and maintaining a presence in 22 states and 6 union territories through an extensive dealer distribution network.
- Consistent Growth: Bansal Wire has demonstrated a steady growth trajectory, with revenue increasing at a 6% CAGR, EBITDA at a 15% CAGR, and net profit at a 17% CAGR from FY22 to FY24.
- High Customer Retention: Bansal Wire has shown increasing customer retention rates, which stood at 64.74% in FY22, 66.06% in FY23, and 68.49% in FY24. No single customer contributes more than 5% to overall sales, and no particular sector or segment exceeds 25% of total sales, fostering a diversified and resilient business model.
- Positive Industry Dynamics: The Indian steel wire industry is poised for growth, benefiting from a global 'China plus one' strategy and expecting an 8-10% CAGR in demand from FY23-28. This is driven by increased infrastructure projects and automobile production, supported by higher government budget allocations.
RISK FACTORS
- Margin Pressure: Despite a revenue and EBITDA CAGR of 6% and 15% respectively from FY22-24, Bansal Wire's profitability is impacted by its significant involvement in the low-margin, commoditized stainless steel sector, resulting in overall EBITDA and net profit margins of ~6% and ~3%, respectively.
- Cash Flow Issues: Bansal Wire has experienced negative cash flows from operations in FY24 and FY22, a trend that could adversely affect its operational capabilities and financial stability if it continues.
- Market Fragmentation: The steel wire industry is notably fragmented; the top 10 manufacturers account for only 22% of total production. Bansal Wire contributes a mere 2% to total production, while the remaining 75% is held by other unbranded, larger, and small-to-medium manufacturers.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 745 crore
Fresh Issue
₹ 745 crore
OFS
₹ -
Price range
₹ 243 - 256
Lot size
58 shares
Issue Objective
Bansal Wire plans to utilise the net proceeds from the issue for the following purposes:
- Repaying or prepaying some of the existing loans;
- Fund its working capital requirements; and
- General corporate purposes.
Dates
Bidding open
3 Jul'24
Bidding close
5 Jul'24
Allotment date
8 Jul'24
Refund date
9 Jul'24
Listing
10 Jul'24
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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