Flair Writing IPO would open for subscription on 22 November and closes on 24 November, 2023. The company is among the top 3 players in the overall writing instruments industry in India. Company had good revenue growth in the last 3 years. Its margins improved from 0.5% of its revenue in FY21 to over 12% in FY23. Should you invest in the Flair Writing IPO? This article would provide insights into IPO details, positive aspects, negative or risk factors and would provide complete review for investors to take decision to invest or not.
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Flair Writing IPO – Dates and Key IPO Information
| IPO Opening Date | 22-Nov-23 |
| IPO Closing Date | 24-Nov-23 |
| IPO Listing Date | 05-Dec-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 5 per equity share |
| IPO Price band | Rs 288 to Rs 304 per equity share |
| Lot Size | 49 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 593 Crores |
| Fresh issue | Rs. 292 Crores |
| OFS | Rs. 301 Crores |
About Flair Writing Instruments Limited
Company is among the top 3 players in the overall writing instruments industry with a revenue of ₹ 9,155.5 million in the financial year 2023 and occupy a market share of approximately 9% in the overall writing and creative instruments industry in India, as of March 31, 2023
As per CRISIL, company is among the top two organized players which have seen faster growth in revenue as compared to overall writing and creative instrument industry growth rate between Financial Year 2017 and 2023
Its flagship brand “Flair” has enjoyed a market presence of over 45 years. They have an extensive range of products across various price points and cater to a broad range of consumers, including students, professionals and offices. They manufacture and distribute writing instruments, including pens, stationery products, and calculators. Leveraging on our manufacturing capabilities, and its existing customer base in the writing and creative instruments business.
They have also diversified into manufacturing houseware products and steel bottles.
During the three-month period ended June 30, 2023, they sold 344.32 million units of pens, of which 279.21 million units or 81.09% was sold domestically, and 65.11 million units or 18.91% was exported globally, and in Financial Year 2023, they sold 1,303.60 million units of pens, of which 975.30 million units or 74.82% was sold domestically, and 328.30 millionunits or 25.18% was exported globally.
Compared with other key organized players in the writing and creative instruments industry such as DOMS, Camlin, Linc and Luxor, this company had the largest distributor/dealer network and wholesale/retailer network, in the writing instruments segment in India, comprising approximately 7,700 distributors/dealers and approximately 315,000 wholesalers/retailers, as of March 31, 2023.
As per Crisil, it occupied a market share of 7.1% in the export of writing and creative instruments industry, in Financial Year 2023.
Objects of the IPO
Flair Writing Instruments IPO Size is Rs 593 Crores which contains both fresh issue and OFS.
#1 – Offer for Sale (OFS) for Rs 301 Crores – This goes to the selling shareholders and the company would not get any proceeds.
#2 – Fresh issue of Rs 292 Crores – These funds would be used for the following:
- Setting up a new manufacturing facility for writing instruments in District Valsad, Gujarat
- Funding capital expenditure of its company and subsidiary, FWEPL
- Funding working capital requirements of the company and its Subsidiaries, FWEPL and FCIPL;
- Repayment/pre-payment, in part or full, of certain borrowings availed by the company and its Subsidiaries, FWEPL and FCIPL;
- General corporate purposes
Flair Writing Instruments Limited – Financials
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Period Ended | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 | 30-Jun-23 |
|---|---|---|---|---|
| Assets | 480.66 | 557.49 | 684.18 | 765.04 |
| Revenue | 310.87 | 587.64 | 954.29 | 248.50 |
| Profit After Tax | 0.99 | 55.15 | 118.10 | 32.14 |
| Net Worth | 264.65 | 319.86 | 437.99 | 470.16 |
| Reserves and Surplus | 241.31 | 296.50 | 391.29 | 423.46 |
| Total Borrowing | 130.31 | 126.33 | 115.59 | 126.67 |
Flair Writing IPO – Positive Aspects
- Leading Market Position: The company is among the top 3 players in the overall writing instruments industry in India. With a substantial revenue of ₹ 9,155.5 million in Financial Year 2023, it holds a market share of approximately 9% in the overall writing and creative instruments industry as of March 31, 2023.
- Consistent Revenue Growth: According to CRISIL, the company is among the top two organized players that have demonstrated faster revenue growth compared to the overall industry from Financial Year 2017 to 2023. This indicates a strong potential for continued growth and market leadership.
- Established Brand Presence: The flagship brand ‘Flair’ has enjoyed a market presence for over 45 years, reflecting brand stability and consumer trust. The extensive range of products across various price points caters to a broad consumer base, including students, professionals, and offices.
- Diversification Strategy: The company has successfully diversified into manufacturing houseware products and steel bottles, leveraging its manufacturing capabilities and existing customer base. This strategic move indicates adaptability and a proactive approach to exploring new markets.
- Strong Global Presence: The company has a significant international footprint, with a substantial portion of its products being exported globally. In the three-month period ending June 30, 2023, it exported 18.91% of its pens globally. The ability to tap into international markets enhances its growth prospects.
- Largest Distribution Network: Compared to key competitors such as DOMS, Camlin, Linc, and Luxor, the company boasts the largest distributor/dealer network and wholesale/retailer network in the writing instruments segment in India. This extensive network, comprising approximately 7,700 distributors/dealers and 315,000 wholesalers/retailers, provides a competitive edge.
- Export Market Share: As per CRISIL, the company occupies a market share of 7.1% in the export of writing and creative instruments industry for Financial Year 2023. This indicates its competitiveness and success in the global market.
- Financial Strength: The company has demonstrated a historical track record of strong financial performance, with industry-leading profitability. The consistent growth in assets, revenue, and net worth, as reflected in the financial data, adds to the overall financial robustness.
- High-Quality Manufacturing and Innovation: The company’s ability to engage in high-quality manufacturing at a large scale, coupled with innovation capabilities, positions it well for meeting evolving market demands and staying ahead in a competitive landscape.
Flair Writing IPO – Risk and Negative Factors
Investors should consider these negative factors before investing in this IPOs.
- Offer for Sale (OFS) goes to selling share holders: IPO proceeds contains both OFS and fresh issue. OFS portion goes to selling share holders and company would not benefit anything.
- Market Dependency and Competition: The company’s revenue and market share are dependent on the writing instruments industry, which may be sensitive to economic downturns or changes in consumer preferences. Intense competition from other key organized players in the writing and creative instruments industry such as DOMS, Camlin, Linc, and Luxor could impact market share and profitability.
- Dependence on Distributor/Dealer Network: While having a large distributor/dealer network is a strength, dependence on it makes the company vulnerable to disruptions in the distribution chain, changes in distributor behavior, or economic conditions affecting the network.
- Delayed Filings and Non-compliance: Historical instances of delayed or inaccurate statutory filings, delayed GST returns, and delayed contributions towards employee provident fund raise concerns about the company’s compliance practices and governance.
- Machinery Order Delay: The company has not placed orders for machinery constituting 100% of the value of the total machinery to be purchased from the IPO proceeds. This may affect the timely implementation of expansion plans.
- Consumer Demand and Product Mix: The success of the company depends on its ability to respond to consumer needs and maintain an optimal product mix. Failure to do so could lead to a decline in product demand and negatively impact financial results.
Investors should review the complete risk factors from Flair Writing IPO RHP
Flair Writing IPO Valuation
- The IPO price band is Rs 288 to 304 per share
- If we consider the last year FY23 EPS of Rs 12.66, the P/E ratio works out to be 24x
- If we consider last 3 years weighted EPS of Rs 8.32, the P/E ratio works out to be 37x
- The listed peers like Kokuyo Camlin Limited trading at P/E 56.8x (Highest) and Linc Limited is trading at P/E of 33.5x (Lowest) and industry average P/E is 45x. Hence, the IPO Price band at P/E of 24x to 37x is attractively priced
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Flair Writing IPO – Good or Bad for investment?
After considering all the pros and cons, you might be wondering whether to invest in this IPO or not
- Flair Writing Instruments Limited holds a strong position as one of the top 3 players in India’s writing instruments industry, boasting consistent revenue growth, a diversified product range, and a significant international footprint. With over 45 years of market presence, its flagship brand “Flair” reflects stability, and the company maintains the largest distribution network in the country. The IPO is attractively priced compared to its peers.
- On the negative side, Offer for Sale (OFS) of Rs 301 Crores goes to selling shareholders with no direct benefit to the company. The writing instruments industry’s susceptibility to economic fluctuations, coupled with intense competition, poses potential challenges. Additionally, dependence on a large distributor network exposes the company to disruptions in the distribution chain.
Investors who understand all these pros and cons can invest in this IPO.
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