On December 1, Flair Writing Industries, a Mumbai-based producer of stationery, is probably going to have a successful listing on the BSE and NSE. Experts predict that the listing price will be approximately Rs 380, a debut premium of about 25% over the issue price of Rs 304.
According to the experts, the estimate is supported by the robust financial performance demonstrated by one of the top three manufacturers of writing instruments, the diversified product portfolio, healthy IPO subscription numbers, and fair valuations. Increased listing gains are also probably to come from a bullish market sentiment.
With 46.68 times as many subscriptions between November 22 and 24, Flair is the third-largest of the IPOs that were launched this week. During the same time period, Gandhar Oil Refinery received 64.07 subscriptions and Tata Technologies received 69.4 subscriptions.
The Rs 593-crore Flair IPO received the greatest boost from qualified institutional buyers, who purchased 115.6 times their allotted quota. High net worth individuals purchased 33.37 times their allotted portion, while retail investors purchased 13.01 times.
According to Prashanth Tapse, research analyst and senior VP of research at Mehta Equities, “we expect a healthy listing premium around 25 percent against the issue price with an optimistic market mood.”
He thinks the robust listing is warranted given the strong growth in writing instruments and stationery sales, the company’s diversification into steel bottles, appliances, and housewares, as well as its ongoing expansion plans to capitalise on further growth.
Parth Shah, a research analyst at StoxBox, predicts that the stock will list at a premium of about 25% over the issue price because Flair is one of the top three companies in the writing instruments market overall and has demonstrated a strong and stable track record of financial performance.
“The company’s rapid revenue growth, aligned with the geometric expansion in demand, is a testament to its successful market penetration and responsiveness to increased demand, particularly in the school sector,” he stated.
As one of the top three companies in the writing instruments market, Flair holds a roughly 9% market share in India’s writing and creative instruments industry. From FY21 to FY23, the company’s net profit increased at a compound annual growth rate (CAGR) of 9.9 times, and its EBITDA margin increased significantly from 7.7 percent in FY21 to 21.2 percent in FY23. Over the same time period, revenue saw a CAGR of 78%.
The company’s strong financial health is highlighted by its net profit margin, which exceeds 10 percent for a stationery entity. According to Parth, a strong asset turnover ratio of 1.5 indicates above-average asset efficiency, and the most recent year’s return on equity of more than 31.2 percent is suggestive of effective capital utilisation.
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