Plaza Wires IPO – Issue Details and Review

Plaza Wires Limited is planning an initial public offering (IPO), with the offering expected to begin on September 29, 2023. The company experienced significant revenue growth. In this article: Plaza Wires IPO Details, key IPO dates, size, price range, positive factors, risk factors, thorough review and analysis.

Plaza Wires IPO – Key details

Plaza Wires IPO Date and Schedule

About Plaza Wires Co., Ltd.

The company is ISO 9001:2015 and 14001:2015 certified and manufactures electrical wires, LT aluminum cables and Fast Moving Electrical Products (FMEG) under brands such as “PLAZA CABLES”, “Action Wires” and “PCG”. and specializes in sales. ” The company aims to provide quality products at competitive prices, especially in the domestic wire and cable industry. In 2021, it introduced an affordable house wire line under the “Action Wires” brand. According to Resurgent India Research, the company is a growing player in the wire and cable industry in northern India, offering a wide range of products including electric fans, water heaters, switches, and more. The industry is experiencing significant growth and is expected to reach Rs 15,500 billion by FY 2026 at a CAGR of approximately 14.50%.

The company’s main products include architectural wire, industrial cables, and cables for submersible pumps and motors. For other products such as power control cables and network cables, we partner with third-party manufacturers that meet quality standards such as Bureau of Indian Standards (BIS). The company is also expanding into FMEG products and has a service partnership for electric fans. The company employs various distribution channels including dealers, government tenders, and direct sales to infrastructure projects. Across India He has over 1,249 authorized dealers and distributors, Delhi, Uttar He has a significant presence in states like Pradesh, Haryana, Kerala and Rajasthan, contributing to increasing revenue .

In summary, the company operates under certification in the Wires, Cables and FMEG sector in India and offers a diverse product range under different brands. They are growing in the northern region and are poised to expand further in the booming market. The company’s distribution channels and supply chain contribute to its substantial presence in key states and drive revenue growth.

Financial Insights about Plaza Wires

Purpose of IPO

Plaza Wires’ IPO size is Rs 7,128 crore and will be used for:

• To expand our product portfolio, we will finance capital expenditures for the establishment of new manufacturing units for residential wires, fire-resistant wires and cables, aluminum cables, and solar cables.
• Financing the company’s working capital requirements.
• For general corporations

Plazawires IPO valuation

The IPO price range is between Rs 51 and Rs 54 per share.

• Considering last year’s FY23 EPS of Rs 2.46, the P/E ratio is 22x.
• Considering the weighted EPS of Rs 2.11 over the past three years, the P/E ratio is 26x.
• Publicly traded peers like Dynamic Cables have a P/E of 32.2x (highest), Cords Cable Industries has a P/E of 16.6x (lowest), and the industry average P/E is 24.5x. Therefore, the IPO price range of 22x to 26x P/E is fully priced.

Plaza Wires IPO GMP

There is currently no active trading in the offline market.

Pros of Plazawires IPO

Investors should also consider the following positive aspects when evaluating this IPO.

• Growth industry: The company operates in the Indian wire, cable and FMEG industry, 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 wire, cable, electrical products and more under a variety of brand names. This diversity in product offerings allows us to cater to different market segments, increasing our revenue potential.
• Expansion plans: Proceeds from the IPO will be used for capital expenditures to establish a new manufacturing unit and expand the product portfolio to include residential wire, fire-resistant wire and cable, aluminum cable and solar cable. This expansion demonstrates the company’s commitment to growth and innovation.
• Strong financials: The company has demonstrated consistent revenue growth and profitability over the years. This stability can give potential investors confidence in the company’s financial health.
• Experienced administrator: Plaza Wires has been in business for over 10 years, is led by an experienced management team, and has established a significant presence in major states of India.
• Reasonable rating: Given the company’s financial position and growth prospects, an IPO price range of £51 to £54 per share seems reasonable and could attract investors looking for potential value.

Risk factors for this IPO

Plaza Wires’ IPO has several risk factors that potential investors should consider.

• Fierce competition: The financial industry is highly competitive, creating pricing pressures and the need to retain existing customers while attracting new business. The company’s growth prospects depend on its ability to compete effectively in this competitive environment.
• Uncertain growth: Although the Company has experienced growth in the past, there can be no assurance that this growth will continue at a similar pace in the future or that it will be able to effectively manage rapid growth. Ineffective implementation of growth strategies can adversely affect a company’s business, financial condition and overall results of operations.
• market conditions: Difficult conditions in the financial markets may adversely affect a company’s business and result in a decline in revenues and profits.
• Customer default: High levels of customer defaults and non-performing assets can have a material impact on a company’s financial health, including its business operations, financial condition and future financial performance.
• Collateral recovery: It may be difficult to recover the full amount of the collateral, or an amount sufficient to cover any amounts owed pursuant to a default, which may adversely affect the Company’s results of operations, cash flows and financial condition. Additionally, collateral value may decline over time.
• Impact on the real estate sector: Adverse developments in the real estate sector could adversely affect our results of operations. Fluctuations in the real estate market and economic downturn may affect our business activities.

Plaza Wires IPO Review – Should you invest or avoid?

Plaza Wires operates in a growing industry with a diverse product offering and exhibits growth potential. The company’s expansion plans and financial stability further enhance its investment appeal, while its experienced management team and substantial presence in key states further enhance its credibility.

On the other hand, the competitive nature of the financial industry may result in pricing pressures, and there is no guarantee that past growth will continue. Adverse market conditions, increasing customer defaults and the impact of the real estate sector pose risks to the company’s financial performance.

Investors can take the following steps: Plaza Wires IPO RHP We have considered all the risk factors and you can invest in this IPO.

Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

Latest posts by Suresh KP (see all)