Plaza Wires shares hit circuits after listing; is it time to book profits?

Shares of Plaza Wires made a strong debut at Dalal Street on Thursday after the wire manufacturing player listed at a premium of nearly 50 per cent. However, the divergence in the listing price led to different movement in the counter post listing, but the movement in shares was restricted.

Plaza Wires was listed at a premium of 56 per cent to Rs 84 on BSE, while the stock debuted at a premium of 41 per cent on the National Stock Exchange (NSE). However, the prices were moved to equilibrium after listing as the stock surged about 6 per cent on NSE to Rs 80.20, while it dropped more than 4 per cent on BSE to 80.23, maintaining overall gains of 49 per cent of the issue price.

The prices were put to equilibrium on both the exchanges but there was not much trade in the stock happening due to the circuit filter. However, the stock has been listed in the 'T' category of 'Trade-to-trade' segment, which means that the stock will have a circuit filter of 5 per cent for initial 10 sessions, while intra-day trading will be prohibited in the counter.

The company is currently hovering around the same price on both exchanges, eliminating any arbitrage opportunities for speculators," said Anushi Vakharia, Research Analyst at StoxBox. "The main differential of the stock price change was due to different opening prices on NSE and BSE which resulted in the stock hitting the lower circuit on BSE but hitting the upper circuit on NSE." she said.

Analysts tracking the stock are not very positive on it after a blockbuster listing. Majority of the analysts suggest investors to book profit and exit the counter considering the euphoria over it. However, a few analysts suggest investors to put a stop-loss for further upside in the longer run.

The listing was in-line to the expectations, given the strong oversubscription of the IPO and the company's strong fundamentals, said Shivani Nyati, Head of Wealth at Swastika Investmart. "Plaza Wires is a well-managed company with a strong track record of growth. It is a leading manufacturer of wires and cables, with a wide product range and a strong customer base," she said.

The company has a strong financial performance, with consistent revenue and profit growth in recent years. Though the IPO size was small, it received an amazing response from investors. Investors may consider booking profit after this listing, while those who are looking for a long-term investment should maintain a stop-loss of Rs 68, Niyati added.

Plaza Wires sold its IPO in the price band of Rs 51-54 per shares with a lot size of 277 equity shares between September 29 and October 5 to raise more than Rs 71 crore via its primary markets. The IPO was overall subscribed 160.97 times during the four-day bidding process.

"Plaza Wires marked a strong market debut but we maintained our cautious stance," added Vakharia from StoxBox. "We continue to be wary of the long-term trajectory of the business, considering the company's a highly fragmented industry with several large players and increased volatility in key raw material prices. We would advise investors to book profits on the listing day."


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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