Flair Writing hit lower circuit after debut; should you hold the stock?

Shares of Flair Writing Industries made a better-than-expected debut at Dalal Street on Friday. However, the stock gave up on this early euphoria, failing to attract any follow-up buying on its maiden trading session and dropped sharply during the day, thereby locking itself up in the lower circuit for the day.

Shares of Flair Writing Industries were listed at a premium of 65 per cent on both the exchanges. The stock was listed at Rs 503 apiece on BSE, while it made debut at Rs 501 per share on National Stock Exchange (NSE), against the issue price of Rs 304 in the IPO.

Following the listing, shares of Flair Writing rose to Rs 514 at opening tick, taking overall gains to 69 per cent over the given issue price, but soon euphoria fizzled out and were locked in the lower circuit of 10 per cent to Rs 452.70, with a total market capitalization below Rs 4,775 crore. The overall gains were limited to 49 per cent only.

Analysts tracking the stock are mostly positive on the stock in the longer-run. They believe that the issue has strong growth prospects in the industry of operations. However, a few analysts suggest profit booking at higher levels. However, investors cannot sell shares at lower circuits.

Also read: Flair Writing makes stellar D-st debut; lists at 65% premium at Rs 503 on BSE

"Surpassing our expectations, the Flair Writing Industries IPO listed at a robust 65 per cent premium on the bourses and is currently trading about 49 per cent higher to its issue price of Rs 304 per share," said Parth Shah, Research Analyst at StoxBox. "We remain constructive on the company and recommend investors to hold the stock from a medium to long term perspective," he said.

Flair Writing Industries made a stellar debut. It holds about 9 per cent of the writing market industry in India, said Mahesh M. Ojha AVP – Research at Hensex Securities. He suggested investors book 50 per cent of profit and hold the remaining portion for the long run.

Flair Writing Industries' IPO was open for bidding between November 22-24 as the company sold its shares in the range of Rs 288-304 apiece with a lot size of 49 equity shares. The stationary products pay a total of Rs 593 crore via primary route, which include a fresh share sale of Rs 292 crore and an offer-for-sale (OFS) of up to 9,901,315 equity shares.

Narendra Solanki, Head - Fundamental Research, Anand Rathi Shares and Stock Brokers believes that the listing is justified due to its strong track record of growth and profitability, with a well-diversified product portfolio.

"Also, these products are widely accepted for their quality and brand reputation across domestic and international markets. With ongoing focus on expansion plans ,strategic partnership with global brands and healthy further growth prospects. We suggest the investors hold the stock as a long term view on IPO according to their risk appetite," he said.

The issue was overall subscribed a strong 49.28 times during the three-day bidding process, thanks to strong demand from qualified institutional bidders (QIBs), whose quota was subscribed a stellar 122.02 times, while the portion reserved for non-institutional investors saw 35.23 times bidding. The allocation reserved for retail investors was booked 13.73 times.

Flair Writing made a strong debut on the stock markets and the listing was even above expectations, given the strong fundamentals of the company and the positive investor sentiment surrounding the IPO, said Shivani Nyati, Head of Wealth at Swastika Investmart. "Overall, Flair Writing is a fundamentally sound company with a strong growth outlook," she said.

Incorporated in 1976, Flair Writing Industries is engaged in developing and manufacturing writing instruments that are tailored to the continuously shifting market. It has established business relationships with some of the leading pioneers in the writing industry.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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