Plaza Wires Limited coming up with Initial Public Offering (IPO), scheduled for subscription from September 29, 2023. Company had strong revenue growth. In this article we would provide Plaza Wires IPO details, Key IPO Dates, Size, Price Band, Positive Factors, Risk Factors and thorough review and analysis.
Plaza Wires IPO – Key Details
| IPO Opening Date | 29-Sep-23 |
| IPO Closing Date | 04-Oct-23 |
| IPO Listing Date | 12-Oct-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | ₹ 10 per equity share |
| IPO Price band | ₹ 51 to ₹ 54 per equity share |
| Lot Size | 277 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | ₹. 71.28 Crores |
Plaza Wires IPO Dates and Timetable
| IPO Opens on | 29-Sep-23 |
| IPO Closes on | 04-Oct-23 |
| Basis of Allotment | 09-Oct-23 |
| Initiation of Refunds | 10-Oct-23 |
| Credit of Shares to Demat | 11-Oct-23 |
| Listing Date | 12-Oct-23 |
| Cut-off time for UPI mandate confirmation | 04-Oct-23 |
About Plaza Wires Limited
The company is ISO 9001:2015 and 14001:2015 certified, specializing in manufacturing and selling wires, LT aluminum cables, and fast-moving electrical goods (FMEG) under brands like “PLAZA CABLES,” “Action Wires,” and “PCG.” They aim to offer high-quality products at competitive prices, particularly in the domestic wire and cable industry. In 2021, they introduced an affordable house wire line under the “Action Wires” brand. According to Resurgent India Research, they are a growing player in the northern Indian wires and cables industry, providing a wide range of products, including electric fans, water heaters, switches, and more. The industry has seen substantial growth, and they anticipate further expansion, with a CAGR of approximately 14.50% to reach ₹1550.00 billion by Fiscal 2026.
Their primary product offerings include building wires, industrial cables, and cables for submersible pumps & motors. For other products, like power control cables and networking cables, they partner with third-party manufacturers who meet quality standards such as Bureau of Indian Standards (BIS). They have also ventured into FMEG products and maintain service tie-ups for electric fans. The company employs various distribution channels, including dealers, government tenders, and direct sales to infrastructure projects. With over 1249 authorized dealers and distributors across India, they have a significant presence in states like Delhi, Uttar Pradesh, Haryana, Kerala, and Rajasthan, contributing to their revenue growth.
In summary, the company is certified and operates in the Indian wires, cables, and FMEG sector, offering a diverse product range under various brands. They are experiencing growth in the northern region and are poised for further expansion in a thriving market. Their distribution channels and supply chain contribute to their substantial presence in key states, driving revenue growth.
Financial Insights into Plaza Wires
| Financial Year ending / Period ending (Amt in Crores) | |||
| Particulars | FY21 | FY22 | FY23 |
|---|---|---|---|
| Assets | 99.28 | 104.17 | 112.10 |
| Revenue | 145.60 | 176.94 | 182.60 |
| Profit After Tax | 4.24 | 5.95 | 7.51 |
| Net Worth | 39.48 | 45.52 | 53.08 |
| Reserves and Surplus | 35.66 | 14.96 | 22.53 |
| Total Borrowing | 43.30 | 40.09 | 39.68 |
IPO Objectives
Plaza Wires IPO Size is ₹ 71.28 Crores and would be used for the following purpose.
- Funding the capital expenditure towards setting up a new manufacturing unit for house wires, fire-resistant wires & cables, aluminum cables, and solar cables to expand the product portfolio.
- Funding the working capital requirements of the company.
- General corporate purpose
Valuation of Plaza Wires IPO
Its IPO price band is ₹ 51 to 54 per share
- If we consider last year FY23 EPS of ₹ 2.46, P/E ratio works out to be 22x
- If we consider last 3 years weighted EPS of ₹ 2.11, P/E ratio works out to be 26x
- The listed peers like Dynamic Cables trading at P/E 32.2x (Highest) and Cords Cable Industries is trading at P/E of 16.6x (Lowest) and industry average P/E is 24.5x. Hence, the IPO Price band at P/E of 22x to 26x is fully priced.
Plaza Wires IPO GMP
There are no active trades happening in the offline market now.
Positive Aspects of Plaza Wires IPO
Investors should also consider these positive aspects when evaluating this IPO:
- Growing Industry: The company operates in the wires, cables, and FMEG industry in India, which has shown significant growth in recent years, and this growth trend is expected to continue in the coming years. This suggests a potentially favorable market environment for the company’s products and services.
- Diverse Product Portfolio: Plaza Wires offers a wide range of products, including wires, cables, electrical goods, and more under different brand names. This diversity in their product offerings allows them to cater to various market segments, increasing revenue potential.
- Expansion Plans: The IPO proceeds will be used for capital expenditure to set up a new manufacturing unit, expanding their product portfolio to include house wires, fire-resistant wires & cables, aluminum cables, and solar cables. This expansion indicates the company’s commitment to growth and innovation.
- Strong Financials: The company has shown consistent revenue growth and profitability over the years. This stability can instill confidence in potential investors regarding the company’s financial health.
- Experienced Management: With over a decade of operating history, Plaza Wires is led by experienced management, and the company has established a substantial presence in key states of India.
- Reasonable Valuation: The IPO price band of ₹51 to ₹54 per share appears reasonable, considering the company’s financials and growth prospects, which may attract investors looking for potential value.
Risk Factors in this IPO
The Plaza Wires IPO presents several risk factors that potential investors should consider:
- Intense Competition: The financing industry is highly competitive, leading to pricing pressures and the need to retain existing customers while attracting new business. The company’s growth prospects depend on its ability to effectively compete in this competitive environment.
- Uncertain Growth: While the company has experienced growth in the past, there is no guarantee that this growth will continue at a similar rate or that the company can manage rapid growth effectively. Ineffective implementation of growth strategies could have adverse effects on the company’s business, financial condition, and overall performance.
- Market Conditions: Difficult conditions in financial markets can have a negative impact on the company’s business, potentially leading to reduced revenue and income.
- Customer Defaults: High levels of customer defaults and non-performing assets can significantly affect the company’s financial health, including its business operations, financial condition, and future financial performance.
- Collateral Recovery: The ability to recover the full value of collateral or amounts sufficient to cover outstanding amounts due under defaulted loans may be challenging and could adversely impact the company’s results of operations, cash flows, and financial condition. Additionally, the value of collateral may decrease over time.
- Real Estate Sector Impact: Any adverse developments in the real estate sector could negatively affect the company’s results of operations. Real estate market fluctuations and downturns may have repercussions on the company’s business activities.
Plaza Wires IPO Review – Should you invest or avoid?
Plaza Wires operates in a growing industry with diverse product offerings, indicating growth potential. Their expansion plans and financial stability add to their investment appeal, while experienced management and a substantial presence in key states further bolster their credibility.
On the other side, the competitive nature of the financing industry could exert pricing pressures, and there’s no guarantee that past growth will continue. Adverse market conditions, high customer defaults, and real estate sector impacts pose risks to the company’s financial performance.
Investors can go through the Plaza Wires IPO RHP for all risk factors and can invest in this IPO.
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